By Daniel Hunter
British workers at the UK’s largest 350 firms took home £56 less in their August 2012 pay packets than in August 2009, according to the latest data from the VocaLink Take Home Pay Index.
The public sector fared even worse with workers taking home £104 less in August 2012 than in August 2009.
The VocaLink Take Home Pay Index uses actual pay data to chart the average wages of public and private sector workers. The data is adjusted for CPI inflation and is therefore a gauge of how household spending power has changed over time.
The manufacturing industry has also suffered real take home pay declines. In August 2012 manufacturing sector workers took home an average monthly wage of £1,710. This represents a loss in real terms of £84 over three years compared with August 2009, when the average manufacturing take home pay was £1,794.
These real take home pay decreases experienced across all four VocaLink Take Home Pay Index measures are likely linked to the persistent weak domestic economic environment, including the above-target inflation rate.
Whilst inflation on the consumer price index (CPI) remained broadly unchanged in August 2012 at 2.5% compared to July’s 2.6% price growth, this is still considerably higher than the Bank of England’s 2.0% target. By comparison in August 2009, when the average worker was £75 better off in real terms, inflation sat at just 1.6%.
In September 2012 the growth in living costs outpaced income increases — placing downward pressure on consumer spending power. Recent predictions from the IMF suggest that the UK economy will shrink by 0.4% this year. This weak economic recovery, combined with global price factors, is likely to take its toll on household budgets.
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