Will you get a pay rise this year?

7 January 2011

Private sector pay is rising but not fast enough, according to new research.

Private sector pay will increase this year, but will still lag behind inflation, according to research by Income Data Services.

This means salaries are trailing further and further behind the increasing cost of living.

On average, private sector pay rose by 2.2% for the three months to November 2010, which is less than half of the retail price index (RPI) measure of inflation.
The RPI index, which measures the average monthly change in the prices of goods purchased by most UK households, is currently running at 4.7%, according to figures from the Office for National Statistics (ONS).

There is some good news though – the number of pay freezes in the private sector continues to fall, with just 6% recorded in the three months to November, the lowest level since the end of 2008.

Read our article:
are you due a pay rise?

Despite private sector salaries rising again after the recession, they have lagged behind the rate of inflation. In addition, experts believe RPI inflation to stay above 4% for the majority of 2011.

Public sector pay has fared worse, however. On average, pay rose by just 0.75% for the whole of 2010, compared to 2% for their private sector counterparts. 

Ken Mulkearn, Editor of IDS Pay Report, says: "Private sector pay settlements could well rise in 2011, under the influence of higher inflation and the tentative economic recovery. But the increase in the cost of living, especially after rail fare rises, and the increase in VAT to 20%, means that most employees' pay will be chasing inflation."

"Meanwhile in the public sector, the government's pay freeze policy means that staff salaries there will fall even further in real terms," he adds.

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