Service sector pay beating inflation while public sector and manufacturing wages lag price rises

11th December 2013

The pay of workers in the service sector is beating inflation but salaries in the public sector and manufacturing are seeing falls in real terms according to the latest findings from the VocaLink Take Home Pay Index.

The monthly index – from the Vocalink, a company that processes salary payments for more than 90% of the British workforce – reveals strong pay growth for service sector workers.

Annual wage growth in the services sector accelerated to 2.7% in the same period, up from 0.9% in the three months to the end of November 2012. Average take home pay grew by 0.3% year-on-year for public sector workers in the three months to the end of November 2013, down from 0.5% in the same period last year.

Annual take home pay growth in the manufacturing sector bounced back in the three months to the end of November, to 0.5%, after falling by 0.7% in three months to October. Wage growth remains relatively weak and only marginally higher than the 0.3% annual increase experienced over the same period last year.

David Yates, Chief Executive Officer at VocaLink, said: “As we approach the Christmas season, workers in the services sector have seen wage growth rise above the current rate of inflation however employees in other areas of the economy are failing to see their pay packets grow in line with rising prices.

“Public sector pay growth over the last 12 months has been much more subdued, which could suggest that the government’s pay freeze has had an effect and whilst wages in the manufacturing sector returned to growth after a dip the previous month, the pace remains sluggish and well below inflation.”

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