PAY PACKETS in the private sector are growing at a faster rate than those in the public sector for the first time since March 2009, said research out today.
Workers in for-profit companies saw their take-home pay increase at an annual rate of 1.4 per cent in September. Pay rises are still lagging far behind inflation, which is pushing up the cost of consumer goods by 3.1 per cent a year.
However, public sector workers fared even worse, with the average pay packet growing by an annual rate of 1.3 per cent last month, according to figures from 600 public bodies compiled by payment specialist VocaLink.
Pay growth has improved slightly over the year, with pay hikes at FTSE 350 companies growing by an average of 0.9 per cent over the year to September, and public sector rises adding 1.6 per cent.
Private companies have managed to bounce back more quickly from the slump in May and June this year, adding 0.9 percentage points to the average wage growth compared to 0.2 percentage points within public bodies.
Douglas McWilliams, chief executive of the Centre for Economics and Business Reform said: “The sluggishness of annual earnings and pay growth is largely the result of slackness in the labour market. The latest data released by the Office for National Statistics has revealed that the claimant count measure of unemployment increased in August for the first time since January.”
Marion King, chief executive officer at VocaLink, added: “With the emergency Budget of 22 June announcing a two-year public sector wage freeze for those earning above £21,000, private sector wage growth is likely to continue outstripping public sector wage growth from 2011 onwards.”