By Daniel Hunter
As the Chancellor prepares to deliver his Budget, the VocaLink Take Home Pay Index reveals the impact declining real take home pay throughout the past 12 months has had on consumer spending power.
Workers at Britain’s FTSE 350 companies were £30 per month worse off entering 2013 compared to January 2012, according to the VocaLink Take Home Pay Index. The Index reveals that workers’ real wages across all the VocaLink Take Home Pay salary indices declined in the past 12 months as high inflation continues to impact spending power.
At the start of 2012 FTSE 350 workers were earning a real average monthly salary of £1,501, but in January 2013 average real wages are down to £1,471. This downward pattern was repeated across the sectors, with the VocaLink Manufacturing average salary index falling in real terms by £44 per month.
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.
Smaller pay packets mean a significant cut in consumer spending power, as wages struggle to keep up with inflation, which rose to 2.8% in February, having sat at 2.7% for the previous four months.
“Real decreases in workers’ wages as a direct result of inflation are a cause for concern," David Yates, chief executive officer at VocaLink, commented.
"While wages continue to lag behind the cost of living, individuals and families may have to tighten their belts and alter their spending habits accordingly, especially as inflation has crept up again in February.
"When the Chancellor delivers his Spring Budget today, it will be interesting to see what can be done to support workers struggling to cope with this growing gap between inflation and wages.”
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