VocaLink Take Home Pay Index Drops to Lowest Ever Level
The VocaLink take home pay index, which has been tracking annual growth in take home pay in the UK since 2004, has fallen to an all time low of 2.4%. This decline comes as a continuing fall in inflation in the current recession makes it increasingly difficult for employees to negotiate pay increases.
Take home pay growth in the manufacturing sector edged up to 1.5% in February, albeit from a four year low of 1.4% in January. This continues to reflect the perilous condition the sector remains in following the collapse of world trade, business investment and consumer spending on durable goods. Wage growth in the service sector fell to 2.9% in February from 3.1% in January, its weakest increase since January 2008.
Helen Ritchie, marketing director at VocaLink, commented that the index highlights how the declining rate of inflation and poor employment prospects continue to reduce the bargaining power of those remaining in work. “A further drop in inflation will increase the pressure on employers to limit pay rises which could see the take home pay index fall even more over the coming months,” Ritchie added.