Private sector employees in the UK predicted to receive 0.2% real pay increase


UK employees working in the private sector are expected to receive a real salary increase of 0.2% in 2018, according to research by ECA International.

Its Salary trends report, which analyses current and projected salary increases for local employees across 71 countries, also found that a 0.2% real salary increase in 2018 for UK staff would equate to approximately an additional £4.41 a month or £53 a year before tax, based on an average annual salary of £26,364. This compares to a real salary increase of 0.1% for UK employees in 2017.

Compared to countries in Europe, only Hungary, Poland and Ukraine are predicted to have a lower real salary increase, which is calculated based on the difference between the forecast nominal salary increase and inflation, than the UK. Germany is expected to see real wage growth at 1.2% and France is estimated to have a real salary increase of 0.9% for 2018.

The average real salary increase across Europe is 1%, with employees in Russia topping the 2018 European rankings with an estimated real salary increase of 3.4% in 2018. Romania’s real salary increase has dropped significantly, from 3.4% in 2017 to a predicted 0.7% in 2018.

India ranks the highest for countries in the Asia-Pacific region, with a real salary increase of 4.9% expected in 2018, while for the Americas, Argentina comes out on top with a forecast 7.2% real salary increase in 2018.

Across the Americas more generally, average real salary increases are predicted to be 1.6% in 2018, compared to 1.4% in 2017. Real salary increases have improved in Mexico, with an increase of 0.8% in 2018 compared to a 1.3% pay cut in 2017, and real salary for the USA and Canada will increase in 2018 by 0.9% and 1.1% respectively.

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In Africa and the Middle East, employees are expected to receive a pay increase of 4.7% in 2018, although Egypt and Nigeria are expected to see pay decreases of 11.2% and 4.8% respectively.

Steven Kilfedder (pictured), production manager at ECA International, said: “Productivity growth in the UK has remained low in recent years so employers have not been able to offer the level of salary increases that they have been able to in the past. This, combined with higher inflation, which is expected to be 2.6% next year, has caused something of a pay crunch for UK [employees].”