Average UK pay rises stall at 4% – less than half the inflation rate
Annual pay growth stalled at 4% in May, leaving most workers with a rise in earnings worth less than half the 9% increase in prices.
Figures from XpertHR, a pay and personnel data publisher, said employer pay deals for the three months to May failed to increase on April’s median 4%, undermining concerns that workers would push for inflation-busting rises in earnings that could start a wage-price spiral.
The report follows a Bank of England business survey that showed employers surveyed in May were not planning a further acceleration in pay rates.
XperHR said May’s 4% rise was the highest since 1992, when the consumer prices index (CPI) measure of inflation hit a high of 7.1% before falling to below 3% later in the year.
Sheila Attwood, the firm’s pay and benefits editor, said: “Despite pay awards reaching record levels not seen for 30 years, any marginal increases we are seeing are outstripped by the sheer pace of inflation.”
A letter on Friday sent to Boris Johnson by 67 economists said there was no wage-price spiral under way in Britain and keeping wages down would risk pushing the economy into a recession.
Coming at the end of the financial year, deals registered in April and May account for a large number of pay agreements between employers and workers, mostly at medium and large organisations.
Stephen Machin, a professor at the London School of Economics, said the survey and official figures from the ONS, which showed pay rises averaging 4.2% across all sectors, revealed workers lacked the bargaining power to push up wages to match inflation.
“Bargaining power in the private sector has been especially weak in the 12 years since the financial crash. And the public sector has suffered even more, with pay deals below the
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