U.K. wages lag well behind inflation

Most public sector salaries frozen

LONDON (Reuters) — Private sector wage deals in the United Kingdom rose 2.6 per cent in the three months to September, lagging well behind the inflation rate of 5.2 per cent, while the pay of most public sector workers remained frozen.

The median wage increase across the whole of the British economy was 2.4 per cent, according to Thomson Reuters' Incomes Data Services (IDS).

The figures highlight the squeeze on living standards many consumers suffer as wage rises fail to match soaring prices.

"It's a fall in real terms, and that's going to be affecting spending power. It may be already affecting the extent of spending in the economy, and economic demand more widely," said Ken Mulkearn, editor of the report.

The IDS report noted that the divergence between public and private sector pay was becoming more stark, as the freeze on public sector pay first rolled out by Britain's coalition government in 2010 continued.

Employees of private sector manufacturers saw a three per cent pay rise overall. Some workers in the non-profit sector also saw pay freezes, while employees in the fast food business, pubs and restaurants saw only very small wage rises.

The data was for the three months to the end of September 2011, based on 57 settlements covering 1,797,319 employees in total.

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