Total pay increases by 0.6% year on year

Pay-Thinkstock-2014

Pay, including bonuses, for UK employees is 0.6% higher than it was a year ago, according to research by the Office for National Statistics (ONS).

Its UK Labour market, September 2014 report found that pay, excluding bonuses, for UK employees was 0.7% higher than it was a year ago.

According to the report, the growth rate reflects low pay growth across a wide range of industy sectors.

The report also found:

  • Average regular pay, excluding bonuses, was £450 per week before tax and other deductions.
  • Average total pay, including bonuses, was £478 per week before tax and other deductions
  • Between July 2013 and July 2014, the Consumer Prices Index increased by 1.6%.

Ben Brettell, senior economist at Hargreaves Lansdown, said:The lack of wage growth is the thorn in the side of an otherwise fairly robust recovery.

“While the figures including bonuses have rebounded, this is due to the effect of organisations deferring 2013 bonuses falling out of the figures. Growth excluding bonuses is flat at 0.7%.

“Productivity, or lack of it, is the key to understanding this problem. Weakness in wage growth reflects very subdued productivity growth, which has been hamstrung by a lack of capital investment.

“Wage increases which are not backed up by increased productivity simply result in price inflation and therefore no real wage growth. Over the long term improvements in productivity are the only source of improving living standards.”

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Andrew Hunter, co-founder of jobs search engine Adzuna, added: “Salaries have been stuck at a standstill for far too long, but there are now some signs that the wage malaise is beginning to lift.

“Demand for skilled workers, alongside greater profits flowing into the balance sheets of employers, is providing the push needed to lift salaries out of their state of inertia.”