Real wages stagnant despite steady private sector pay rises

 
Ben Southwood
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PRIVATE sector nominal wages grew steadily over the last few months, according to research published today by Incomes Data Services (IDS).

The median pay deal in the three months to May 2012 was three per cent in the private sector, but just 2.5 per cent in the economy overall, as some pay freezes in the public and voluntary sectors took their toll.

Since retail prices increased 3.1 per cent and consumer prices increased 2.8 per cent in the year to May, the headline figures seems to show that real wages were decreasing only slightly.

However, the weighted average – taking into account the number of employees covered by each pay deal – was far lower, at just a 0.6 per cent rise. This suggests many workers have seen significant declines in their purchasing power – of up to 2.5 per cent. Private sector manufacturers saw three per cent median increases, whereas the median for private sector services was 2.6 per cent. In the manufacturing sub-sector for chemicals and pharma, the median award was up 3.4 per cent. Similarly, bigger firms -- those with over 5,000 employees, tended to award smaller increases, with the median award at 2.5 per cent, compared to a median of three per cent for firms with fewer staff.