By Daniel Hunter

The VocaLink Take Home Pay Index shows manufacturing sector wage growth falling sharply to -0.3%; this puts it into negative territory for the first time in 18 months.

The FTSE 350 Take Home Pay Index also suffered in the three months to September, falling to 1.5% growth, it’s weakest since April 2011, and less than half the 3.1% growth peak in July this year. The VocaLink Services Index has slowed too, down to 1.7% year on year growth in the three months to September — significantly down from a peak of 3.1% in July.

The VocaLink Public Sector Index has remained broadly unchanged in recent months, as take home pay growth stands at 0.7% for the three months to September, compared to 0.6% for the three months to August. This reflects industry-wide pay freezes among public sector workers.

“The VocaLink Take Home Pay Index makes for difficult reading this month as it paints an unhappy picture of the UK economy," David Yates, Chief Executive Officer at VocaLink, said.

"One particular point of concern is the manufacturing industry, which continues to suffer as British exporting orders decrease. These conditions impact wages as prospects and confidence are lowered, constraining demand for workers.”

Douglas McWilliams, Chief Executive of economics consultancy Cebr, said:
“At a time when British political parties are in the midst of conference season, economic stimulus is unsurprisingly on the agenda. However as the VocaLink Take Home Pay Index shows, maintaining disposable income growth is creating a genuine challenge for the government as it battles double dip recession.

"This month’s Index should act as a warning that the current economic programme is struggling to tackle the tough business environment, which in turn is damaging take home pay figures. Whilst the increase in tax-free Personal Allowance has gone some way to strengthening take-home pay, businesses remain cautious in making new hiring decisions, reducing workers’ wage-negotiating power.”

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