By Daniel Hunter
The VocaLink Take Home Pay Index reveals that private sector take home pay is currently at a six month high, showing annual growth of 1.0% in the three months to the end of March. This is the first time the FTSE 350 Take Home Pay Index has grown by a full one percent since September 2012.
Much of this private sector growth was driven by annual take home pay strength in the VocaLink Manufacturing Sector Index, which grew to 2.9% in the three months to March. However, the latest ONS figures show a decline in manufacturing output between December and January. This decline, coupled with the ongoing Eurozone economic weaknesses, suggests the recovery in the manufacturing sector is unlikely to be sustained.
The VocaLink Services Take Home Pay Index remains broadly unchanged in the three months to the end of March, sitting at 0.7%. This index has grown at variables around this rate for the last six months and is expected to continue growing at a similar pace for the foreseeable future. Likewise, the VocaLink Public Sector Take Home Pay Index, which has fluctuated below 1.0% growth since April 2012, failed to grow in the three months to the end of March, with annual growth in the index of 0.0%.
Following last month’s Budget announcement that public sector pay increases are to be limited to an average of 1% for the next two years, the VocaLink Public Sector Take Home Pay Index is not likely to see its growth rate improve in the short or medium term.
“Today’s VocaLink Take Home Pay Index findings, showing growth in private sector take home pay at its highest rate since September 2012, will be welcome news to employees," David Yates, Chief Executive Officer at VocaLink, said.
"However, take home pay growth is still overshadowed by the rate of inflation and this could continue to put pressure on workers’ disposable incomes in the months ahead.”
Douglas McWilliams, Chief Executive of economics consultancy Cebr, said:
“Despite relative improvements in the annual growth of take home pay in the private sector, workers’ wage growth remains fragile. March 2013 pay growth is weaker than the 1.7% growth achieved in March 2012 and has been much weaker through the first quarter of 2013 than the same period last year. With economic growth forecasts low, particularly in the manufacturing sector, it is likely that workers’ wages will continue to struggle.”
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