Private pay is stagnating as public soars

PRIVATE sector pay is stagnating while public sector workers have received above-inflation pay rises, separate reports revealed yesterday.

The Office for National Statistics (ONS) said average earnings in the private sector fell by 0.1 per cent in the three months to November from a year earlier.

By contrast, pay in the public sector rose by 3.8 per cent. Total pay, including bonuses, averaged £447 a week in the private sector in November, and £459 in the public sector.

The data came at the same time as a separate report showed executive pay rises have dropped below the national average for the first time in a decade, signalling the start of a “significant” change to the way directors are paid.

The report by PricewaterhouseCoopers (PwC) shows directors of FTSE 100 companies received a base pay increase of one per cent last year, below the national average increase of 2.5 per cent. Executives in the FTSE 250 fared even worse, with the average salary remaining frozen. In addition, one in six directors did not receive a bonus last year. While bonus potential for directors remained stable at 150 per cent of salary in the FTSE 100, actual bonus payments decreased by 20 per cent to an average of £525,000.

By contrast, in 2008 both FTSE 100 and 250 directors received a six per cent pay rise, outstripping the national average increase of 3.7 per cent.

PwC has predicted “significant” changes to executive pay over the next five years, with long-term bonus calculations moving to a simpler system that better links risk to reward.

The ONS’ new average weekly earnings series, a cash-based measure, showed that overall average pay, excluding bonuses, rose by 1.1 per cent in the three months to November – the weakest growth since the series began in 2001.