The average pay rise of 1.7 per cent failed to keep up with inflation.Once inflation is taken into account, workers on an average salary saw their spending power diminish by £726.
Rising employment amid the fallout of the recession means salaries have not been as competitive as they may have otherwise been.
“Unemployment and underemployment has meant there is very little upward pressure on wages...We expect public sector pay growth to drop further in 2011. The pay freeze and the pension review are both likely to have a dampening effect on take home pay growth.” Marion King, chief executive at VocaLink, said
Andrew Hagger, of personal finance website Moneynet.co.uk, said “Many savers have all but given up on trying to eek out some additional income from their savings, and with food, fuel and energy prices soaring, and a VAT increase imminent, people will increasingly be digging into their savings just to stay afloat.”
According to separate research. Households will be hundreds of pounds out of pocket when the rise in Value Added Tax comes into effect in January. Groups that will be the worse off include married couples living with grown up children who need help with mobile phone bills and clothing, young childless couples who frequently eat out and married pensioners on fixed incomes, according to the report by marketing services group Acxiom.
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