Pay Freezes Affect Public Sector Workers Most

Published: 4 August 2011 By Julian Stone Leave a Comment

Just one in four employees have had a pay rise this year – and the public sector is worst affected, according to a new survey by the Chartered Institute of Personnel and Development.

Pay freeze affects public sector workersCurrent levels of inflation mean rising prices for many everyday consumer goods – and that’s bad enough without the problem being compounded by wages which just aren’t keeping pace.

According to the Chartered Institute of Personnel and Development (CIPD), just one in every four employees have received a raise this year as companies continue to cut back and make savings.

The survey, which polled 2,013 people between 20 and 24 June, found that 58% of employees had had their salaries frozen while a further 6% had their base pay cut.

Public sector workers have had to swallow the lion’s share of the pain with 77% of workers reporting a pay freeze compared to 52% in the private sector. Among those who saw an increase, the average rise was just 3% – well below the current 4.2% rate of inflation.

The CIPD revealed that within the private sector, those working in manufacturing and finance were most likely to get a company pay rise while workers toiling away in the hotel, restaurant and construction industries received the least generous pay rises.

CIPD pay and benefits specialist, Charles Cotton, commented: “Even those who are lucky enough to get an increase in their pay will find it below the current cost of living, compounding consumer belt-tightening. Inflation figures later this month will highlight growing pricing pressures, which is likely to continue for some time.”

Moneyhighstreet comments: “This is another round of bad news for household budgets and if another rise in the rate of inflation is announced, it will mean a further decline in the value of wages people are being paid – effectively resulting in a pay cut.

“No wonder families are even struggling to entertain themselves this summer, with many facing the risk of debt problems as they try to do so.

“The one positive thing about the news is that a quiet labour market and stagnant wages are both good reasons for the Bank of England to keep the base rate of interest at it’s current level of 0.5%. This will be good news for borrowers and mortgage holders, albeit not so good for savers.”

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