UK workers are set to get an average overall salary increase of 2.9% in 2017, one of the highest rises in Europe, according to data from the Willis Towers Watson Salary Budget Planning Report. However, rising UK inflation of 2.8%, compared to 0.7% in 2016, will almost entirely wipe out these nominal wage gains, the research suggests.
The forecast inflation-adjusted wage growth rate in the UK for 2017 is one of the lowest in Europe and well below the EU average of 1%. The persistently high inflation rate of 2.8% forecast for the UK in 2018 will ensure that its workers continue to see their average pay stagnate in real terms compared to workers in every other country in the EU, with the exception of Slovenia (where a real pay fall of 0.3% is predicted in 2018).
In contrast to the UK market, the position is forecast to be relatively more positive in other European countries for 2018, including:
Keith Coull, Senior Consultant in Data Services at Willis Towers Watson, said:
‘The UK jobs market has otherwise been robust with record employment rates and the lowest unemployment since 1975. But coming so soon after the post-crisis pay squeeze, this latest freeze on wages, driven by an inflation rate accelerating sharply since 2016 and showing no sign of slowing down, suggests the squeeze on pay and living standards is likely to intensify in the coming months.’