Prepare for another 12 months of pay misery

By BECKY BARROW FOR MAILONLINE
Updated:

 

Workers should prepare for another year of pain, with pay freezes or rises well below inflation, researchers say.

Wage slip

The big freeze: Workers will have to wait another year for pay rises.

Their prediction will be a blow for millions who are already struggling to make ends meet, particularly following the recent rises in VAT and petrol prices.

A report from pay experts Incomes Data Services says the public sector, which employs one in five workers, will be the biggest loser.

Public sector staff are facing a two-year pay freeze, except for those earning less than £21,000, who will get a 'flat' pay rise of £250 in each year.

In the private sector, workers will be better off, with the prediction of an average pay rise of 3% this year compared with 2% last year.

But this is still far below the rising cost of living. At present the consumer prices index measure of inflation is 3.3% and the retail prices index is 4.7%.

Many believe the RPI is a more accurate reflection of the cost of living as it includes key bills such as council tax.

This means a private sector worker's pay may go up but bills and other living costs will rise faster, thus eroding their spending power.

Ken Mulkearn, editor of the IDS Pay Report, said: 'The majority of employees are unlikely to receive pay increases that match rises in the cost of living.'

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A woman in office on the phone

It comes as one of the biggest expenses - filling up the family car - has reached record heights, with the average price of petrol hitting £1.27 per litre.

Over the past year the average price of petrol has shot up by 16%, while a private sector worker's pay has risen by an average of just 2%.

The gulf between the two figures highlights the nightmare facing employees, whose takehome pay is also under attack from this week's VAT rise and April's National Insurance increase. Other key costs such as rail fares are rising by up to 12.8% this year.

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