SALARIES / FEB. 19, 2014
version 3, draft 3

Majority of UK Workers Expecting Pay Freeze in 2014

The results of a study conducted by the Chartered Institute of Personnel and Development (CIPD) have determined that the majority of the United Kingdom’s work force are expecting their wages to ‘be frozen or remain below inflation’ in 2014. The news comes amid increased speculation in recent weeks that the fall noted in real wages over the course of the past few years will not be amended until productivity rises.

The study, the results of which were published earlier in the week, found that around one third of employees in the UK aren’t expecting any form of increase in their remuneration over the coming year, despite reports that the economy is on the mend. Furthermore, an additional third stated, that any increase they do note in their pay will be unlikely to keep up with the rate of inflation.

A ‘Sustained Squeeze’.

Out of the 2,700 people who took part in the study, one third reported receiving a real terms wage rise in 2013. Despite this, a sustained squeeze on household finances continues to grip a large proportion of people, with average weekly incomes falling to between 7.8% and 10.2% lower than they were at the end of the recession in early 2009.

The most brutally unrelenting fall in wages since the time of the Second World War, the CIPD reports that we can only expect a reversal of circumstances, once the nations dwindling productivity record has noted a serious improvement. Comparing the case in the UK to that in the United States, the bleak study goes on to conclude that real term pay increases can’t be taken for granted even if the economy manages to stay on its current upward trajectory.

A Challenge for Management

Among those expected to bear the brunt of the situation are management level employees. Faced with the challenge of accessing other means of employee motivation, which all together side-line financial gain, senior employees in many sectors are set to experience a turbulent 2014.

Chief economist at the CIPD, Mark Beatson said: “The politically charged debate about wages and the cost of living won’t be solved by politicians trading blows over statistical analyses. Instead, we need to recognise as a nation that real increases in pay will only be delivered through increases in productivity, and that for this to happen we need employers, employees and policy makers to come together in a combined effort to improve UK productivity.”

Proposing a ‘shared agenda’ intended to produce a long term improvement in productivity alongside sustainable higher rates of pay and a decrease in unemployment, Mr Beatson affirms: “Government has a part to paly too, with a more concerted effort needed to provide an improved supply of higher level skills and just as importantly encourage greater demand for and utilisation of these skills”. Perhaps with these measures, workers can start to see a real increase in their wages, in line with inflation. 

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