27th March 2014
Employees in both the private and public sectors have seen their purchasing power fall considerably compared to five years ago, according to the latest VocaLink Take Home Pay Index.
FTSE 350 workers were on average £130 per month worse off in the three months to the end of February 2014 compared to the same period in 2009. Within this, employees in the services and manufacturing sectors were £127 and £161 respectively worse off in real terms. Public sector workers were £118 worse off.
However, there are signs that private sector workers are seeing their spending power recovering. The FTSE 350 real take home pay index grew at a year-on-year rate of 0.5% over the three months to February, supported by declining inflation.
This means that FTSE 350 workers are on average £8 per month better off in real terms compared with a year ago. In the public sector, however, real take home pay was 1.0% lower than a year ago for the three months to February – leaving those working for government £16 per month worse off in real terms.
David Yates, Chief Executive Officer at VocaLink, said: “Although annual real wage growth for FTSE 350 employees stood in positive territory over the three months to February, our latest Take Home Pay Index shows that spending power remains lower for all workers than over the same period of 2009. Public sector workers continue to see their take home pay declining in real terms compared with a year ago.”
In real terms, wages grew by the following year-on-year rates for three months to the end of February.
FTSE 350 employee wage growth slowed to 0.5% (down from 0.6% in the three months to January).
FTSE 350 employee manufacturing wages growth increased to -0.5% (up from -1.2% in the three months to January 2014).
FTSE 350 employee service sector wages growth slowed to 0.6% (down from 0.9% in the three months to January 2014).
Public sector wages growth increased to -1% (up from -1.2% in the three months to January).