Pay cuts for millions of workers as prices rise - from Personnel Today

8th May 2010

Millions of workers are facing the misery of effective pay cuts as salaries fail to keep pace with the rising cost of living.

A litre of unleaded petrol now costs 121.3p on average, and food bills remain high.

However, the latest monthly survey by Incomes Data Services (IDS) found that wages rose at an average annual rate of just 1.9% in the three months to the end of March - only 0.1% more than during the three months to the end of February.

This is well below the rise in the cost of living, which hit 3.4% during March, according to the Consumer Prices Index.
About 31% of pay settlements agreed during the three months to the end of March involved a pay freeze, a slight improvement on the period to the end of February, the Telegraph reports.

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John Philpott, the chief economist at the Chartered Institute of Personnel and Development (CIPD) and a leading employment expert, said: "Consumers may not notice it for a while if their pay has gone up in nominal terms.

"But when inflation outstrips wage growth it has a depressing effect, not just on the economy but on families as well. It affects consumers' sense of well-being and their willingness to spend."

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