Staff face real terms pay cut for fourth consecutive year

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UK pay awards are expected fall short of inflation for the fourth year in a row, analysis from XpertHR reveals.

The median whole-economy basic pay award has been worth less than the retail prices index (RPI) inflation since the beginning of 2010, according to the data, which monitors the level of pay awards across the UK in both the public and private sector.

Median basic pay increases stood at just 2% over the three months to the end of May 2013, while RPI came in at 3.1% in May 2013 and is forecast to remain above 3% through to the end of the year.

Employers are currently predicting a median 2.5% pay award over 2013 as a whole, according to XpertHR research. With no signs of an immediate, or sustained, pick-up in the level of pay awards the HR firm warned that employees were facing the real prospect of a fourth consecutive year of pay awards falling behind inflation.

It added that this represented a real terms pay cut as any pay increase was cancelled out by prices rising at a faster rate.

"The combination of subdued pay awards and elevated inflation will leave many employees out of pocket for yet another year," XpertHR Pay and Benefits editor Sheila Attwood said.

"Employers are continuing to exercise caution when it comes to reviewing their pay bills, and we see no sign of a sustained upturn in pay settlement levels this year."

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