Average pay rises increase to 2.5%

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Median pay rises have increased to 2.5%, the highest since last summer, according to a new study.

Pay analysts Incomes Data Services (IDS) said there had been a 0.5% increase in the three months to January compared with the previous quarter.


The research, based on almost 50 wage settlements covering 630,000 workers, showed that despite the recent increase, deals were still running below the rate of inflation.

A third of all awards in the latest period were worth between 3% and 3.9%, mainly in the automotive, engineering and chemical manufacturing sectors.

Ken Mulkearn, head of pay and research at IDS, said: "The difficult economic situation is the main obstacle to stronger pay growth.

"When it comes to pay rises, 2% represents a floor for most companies, with those in serious economic difficulties opting for freezes.

"But it's also striking that 3% is the single most common figure for settlements. This isn't far off the latest RPI inflation figure, though the fact that this remains above 3% means the squeeze on employees' purchasing power continues.

"While the economy is the main focus, bosses and workers alike will be keeping a close eye on the cost of living over the coming months."

TUC general secretary Frances O'Grady said: "It's encouraging to finally see some upward pressure in pay settlements. But with the average increase still trailing inflation, most people's incomes and household budgets will be squeezed even further in the coming months.

"That's why getting the economy growing again should be the Chancellor's top priority, not endless austerity. It's the only way to support healthier pay rises and ease our living standards crisis."

© 2013 Press Association