By Daniel Hunter

Public sector worker take home pay in May 2012 was at the lowest level in real terms since records started in 2008 according to the latest data from the VocaLink Take Home Pay Index. This comes as the FTSE 350 sector wages show signs of recovery after a challenging couple of months.

In May 2012 public sector workers took home an average monthly wage of £1,563. This represents a loss in real terms of £103 over four years compared with May 2008, when public sector take home pay was £1,666.

Struggling public sector wages can be linked to continuing unemployment issues in the sector placing downwards pressure on wage growth. The latest labour market data shows that 39,000 public sector jobs were lost in the first quarter of 2012, increasing job competition and lowering bargaining power in wage negotiations.

In comparison, the VocaLink FTSE 350 Index is starting to recover from the record low real take home pay experienced in April 2012, with workers taking home on average £1,476 in May 2012.

The VocaLink Services real take home pay in May 2012 was, on average, £1,443, up by £10, beginning its recovery from the record low experienced in April 2012 when workers took home real wages of £1,433. The manufacturing sector continues to outperform all other sectors in terms of real take home pay with the average May take home salary for the sector at £1,751.

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 figures presented by the VocaLink Take Home Pay Index provide an opportunity to consider the wider economic picture," David Yates, chief executive officer at VocaLink, commented.

"Today we saw annual inflation on the consumer price index (CPI) fall to 2.4% in June, down from 2.8% in May 2012, narrowing the gap between inflation and private sector take home pay growth. If inflation continues to fall over coming months, this could have a positive impact on retail sales. This, combined with the economic boost expected over the Olympics, would provide a much needed stimulus to the British economy.”

Douglas McWilliams, founder and chief executive at Cebr, said: “The figures out today on public sector wages illustrate the importance of job creation in boosting the economy. This becomes especially clear when one compares the real take home page figures of the public sector, which experienced a cut of 39,000 jobs in the first quarter of the year, with the private sector, which saw the creation of 205,000 new jobs during the same time period. Private sector employment stands 1.4% higher than a year ago, suggesting a rebalancing of the labour force away from government-dependence. Nevertheless, the claimant count measure of unemployment rose by 8,100 between April and May, suggesting that labour market conditions remain fragile.”

Join us on
Follow @freshbusiness