Private sector pay rises as public sector earnings slow

5 Nov 10
Public sector pay has started to stagnate while private sector salaries are showing signs of growth, according to an analysis of the latest pay data.

By Vivienne Russell

5 November 2010

Public sector pay has started to stagnate while private sector salaries are showing signs of growth, according to an analysis of the latest pay data.

The report, by payment systems company VocaLink, shows that public sector take-home pay stayed at 1.3% for the third month in a row in October.

In contrast, private sector pay hit a 12-month high in October, growing by 1.6%.

Marion King, chief executive officer at VocaLink, said: ‘We expect annual public sector pay growth to fall over the next year as the half a million public sector job losses take effect, and the pay freeze fully sinks in.

‘Meanwhile, at 1.6%, private sector pay is increasing at its highest level for 12 months, but with inflation still at 3.1%, even private sector workers continue to feel the pinch.’

Doug McWilliams, chief executive of the Centre for Economics and Business Research, which analyses the data supplied by VocaLink, said consumer prices were likely to rise.

‘Combined with the VAT rise to 20% in January, it means that above-target inflation over the next year is highly likely,’ he said.

‘Unless pay growth increases dramatically over the coming months, households will see their spending powers, and their standard of living, diminish.’

VocaLink’s Take Home Pay Indices track monthly pay in the UK using data captured from the salary payments of more than 200 FTSE 350 companies and over 600 public sector organisations.

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