Aon Hewitt research: UK salaries set to grow by less than inflation

UK salaries increases are expected to rise but will still be below current inflationary levels.

The Aon Hewitt 2010/2011 European Salary Increase Survey found that the average UK salary is expected to rise from 2.5% in 2010 to 2.7% in 2011.

However, salary increases are still far below the 2007 pre-recession levels of 4.6%, despite improved corporate financial performance.

Inflation, currently at 3.1%, is expected to remain above the Bank of England target of 2% next year due to the rise in VAT in January, meaning that there will be no ‘real’ salary increases for the third year running.

As in 2009, senior managers received the lowest average salary increases in 2010 at 2.3%, while middle management and professional levels received the highest average increases of 2.5%.

However, senior managers are expected to receive the highest average increase in 2011 at 2.9%.

Andrew Macleod, senior reward consultant at Aon Hewitt, said: “Compared to 2009, when 47% of the participating companies reported salary freezes, in 2010 only 12% did so and even fewer are expecting one next year.

“Although this appears to be a positive sign for employees, pay rises are still at a subdued level, owing to the uncertain economic climate and they are struggling to keep up with inflation.

“As this is set to remain at higher levels for the foreseeable future and above general salary increases, employees will be looking for ways to maximize their earnings.”

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