Rising costs of living and weak salary growth are eroding the spending power of UK employees, according to a new study by global management consultancy Hay Group.
 
With median salary growth forecast by Hay Group to reach just 2.4% this year, and inflation rising to 5.3% according to the Retail Price Index (RPI), pay is falling in real terms for the average British worker for the first time in a decade.
 
Hay Group predicts the outlook for the next four years is a bleak one, with median pay increases likely to remain below inflation.
 
The forecasts represent a sharp turnaround after consistent pay increases over the last 10 years, amounting to a 37% rise in median base salaries, or 9.5% in real terms when taking RPI into account.
 
The study is based on salary data for 1m UK employees in 600 organisations, taken from Hay Group’s PayNet, a database of pay and benefits.
 
Steve Paola, reward information consultant at Hay Group, says: “After a decade of real pay boom, recession and continuing uncertainty are having a negative impact on real pay for the UK workforce. It may be a number of years before we see living standards rising at pre-crisis levels.”