Average UK pay to rise by 0.1% in real terms in 2017


The average overall salary increase for UK employees in 2017 is expected to be 0.1% in real terms, according to research by Willis Towers Watson.

Its Salary budget planning report, which is a global wage level study incorporating 13,250 responses from organisations across 139 countries worldwide, found that the average salary increase in 2017 for UK employees is 2.9%, but rising inflation of 2.8% reduces these wage gains to 0.1%. Spain is the only country in the European Union (EU) set to record a lower real terms figure than the UK in 2017 at 0%.

By comparison, in 2016 the UK recorded an overall average salary increase of 2.8% and a pay increase of 2.1% in real terms.

The expected EU average overall salary increase in real terms, which has been adjusted for consumer price inflation, is 1% for 2017. Countries such as Ireland (1.9%), France (1.1%), Germany (1.2%), Italy (1%), Netherlands (1%), Denmark (1.2%), and Finland (1.0%) are set to achieve a higher pay increase in real terms than the UK in 2017.

The average overall salary increase for UK staff is predicted to stay at 0.1% in real terms for 2018, with an estimated salary increase of 2.9% against an inflation rate of 2.8%. The only country with a lower rate is Slovenia with -0.3%.

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Other EU countries will continue to see positive overall salary increases in real terms in 2018. This includes Ireland (1.1%), France (1.1%), Germany (1.5%), Italy (1.7%), Netherlands (1.3%), Denmark (0.5%), and Finland (0.7%).

Keith Coull, senior consultant, data services at Willis Towers Watson, said: “The UK jobs market has otherwise been robust with record employment rates and the lowest unemployment since 1975. But coming so soon after the post-crisis pay squeeze, this latest freeze on wages, driven by an inflation rate accelerating sharply since 2016 and showing no sign of slowing down, suggests the squeeze on pay and living standards is likely to intensify in the coming months.”