Latest research has identified that the UK employee will overall maintain an average 3% wage salary increase during 2014. Although salary additions have been very minimal over the last couple of years and to some extent stagnant, these figures along with the current high inflation rates will again see ‘real value’ incomes pretty much stay on hold.
Although there is a lot of positive talk and good signs of a UK economic recovery, this current business sentiment has given private sector organisations the incentive and confidence to maintain their 2014 pay budgets above the forecasted inflation rate, although one almost counter balancing the other. This is a shame and slightly disappointing but probably a true reflection of how the recovery could be slow but steady, however definitely going in the right direction. It also shows how income improvements globally are very similar with inflation rates closely tracked against pay rises throughout the major economies.
So looking deeper at the data, in comparison with other countries in Western Europe and North America, the UK’s anticipated 2.7% rise in the cost of living far surpassed anywhere else in the region. Countries like Germany, France and the Netherlands expect living costs predicted at around 1.8%, far outweighing the salary buying power of the UK.
Italy’s 2.9% planned pay increase and Spain’s 2.5% are significantly higher than the forecast inflation rates of 0.7% and 0.8%, respectively.
Analysing areas further field, Eastern Europe countries, such as Bulgaria, Poland and Romania, salaries are increasing at a slightly higher rate than in the Western continent at between 4% and 5%, however these countries have a lot of catching up to do alongside other growing economies and labour market successes.