Despite the Consumer Prices Index (CPI) hitting its lowest level since 2009, a new report from Uswitch.com cements the fact that wages are still failing to keep up. Less than a quarter (23%) of UK salaries are rising at a rate of 1.9% or above, meaning that the challenge facing households to meet rising bills and living costs is by no means over:
Over three quarters (77%) of the population’s wages are not keeping up with inflation
The average pay rise across the UK is just 1%, but less than one in two**(45%) workers will receive a pay rise at all this year**
Almost half (46%) have seen their pay frozen over the last twelve months, but 16% have seen it frozen for more than two years
High earners get the highest pay rises: the top 10% of earners will be getting an average pay rise of 2.4%, whereas the bottom 10% will get just 0.5%
The average pay rise in the private sector is 1.3% – but for the public sector it’s just 0.7%
Postcode lottery: the most likely to receive a pay rise this year are those in the North East (54%), while the least likely are workers in Wales – under a third (32%) will enjoy a pay rise this year
One in three people (33%) would consider moving to a different part of the UK if they were to get paid more.
With the spiralling cost of living leaving consumers struggling to keep their heads above water, many will be hoping that a pay rise this year will provide them with a lifeline. But new research from Uswitch.com, the independent and impartial price comparison and switching service, has uncovered that three quarters (77%) of UK workers will see pay increases below the CPI of 1.9%. In fact, with less than half (45%) getting a pay rise at all this year, the average increase will be just 1%.
Last year, 46% of workers experienced a pay freeze and this year the figure is expected to climb to 55%. Things are even worse for 16% of workers, who have already seen their wages remain stagnant for more than two years. Meanwhile, working hours are on the up – a quarter of consumers (25%) worked longer hours over the last year.
The report has also uncovered that higher earners will be receiving the biggest pay rises in 2014. Those in the top 10%, who earn more than £45,000 a year, will be getting an average pay rise of 2.4% whereas for those in the bottom 10%, who earn under £7,500, it will be just 0.5%.
There is also a considerable difference in the pay increases between the private and public sector. Those in the private sector will receive an average increase of 1.3%, while for the public sector it’s just 0.7%.
The older generation are more likely to experience a pay freeze than their younger colleagues – 52% of workers over the age of 55 have had a pay freeze in the last 12 months compared to 46% of 35 to 54 year olds and 36% of those aged between 18 to 34.
Despite the growing confidence in the UK economy, optimism amongst consumers isn’t keeping pace. Over half (53%)have said that they’re worried about their financial situation and a fifth (20%) think that it will get worse this year. The younger generation are the most hopeful – 40% of 18 to 34 year olds expect their financial situation will improve. Comparatively, a quarter (24%) of those over the age of 55 think that it will get worse as the year goes on.
Regional differences
The research has also revealed a postcode lottery when it comes to who will be receiving a pay rise this year. Those living in the North East are the most likely to get one with 54% expecting a welcome boost to their pay cheque. Yorkshire and Humberside residents are close behind with 53%.
At the other end of the scale, just 32% of workers in Wales will see an increase to their salary this year and just 38% in the South West. For Londoners it’s a case of heads or tails – 50% have a pay rise to look forward to in 2014.
A third (33%) would consider moving to a different part of the UK if they were to get paid more. Unsurprisingly, the youth are the most mobile and willing to uproot for a bigger return on their working hours – almost half (46%) of the younger generation would relocate, while only a fifth (21%) of older workers would consider it.
Ann Robinson, Director of Consumer Policy at Uswitch.com, says: “It’s now clearer than ever that consumers are struggling to keep afloat in the tidal wave of increased living costs. Yet no lifeline is being thrown by employers. In fact, things are looking even bleaker, with even more people facing a pay freeze this year than last. This reality is a far cry from the growing optimism that the UK economy is on the up – with over three quarters of consumers’ wages not keeping up with inflation.
“Consumers are also facing a postcode lottery when it comes to pay rises making it no longer just who or what you know – but also where you live that counts. While some workers can’t change this – or their employer’s budgets – they can take matters into their own hands and cut their household running costs.
“Start by building a budget and strictly scrutinise your household outgoings to find where you can ease up on your spending. For those essential household bills you can’t escape, make sure you are on the cheapest deal possible. You could save up to £1,800 a year by switching your household bill providers – a welcome bonus to any bank balance.”
Alexa Wheeler
Phone: 0207 1484 661
Email: alexa.wheeler@uswitch.com
Twitter: @uswitchPR
All research referred to below was conducted by Opinium amongst 2,000 respondents in January 2014.
Consumer Price Inflation was 1.9% in January 2014. In response to “Thinking about 2014, do you think you will get a pay rise in your CURRENT JOB by the end of this year?” and “What percentage was this rise/what percentage will this rise be?” - 76% of all respondents are expecting a pay rise of less than 1.9% this year. (ONS report on inflation http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/january-2014/consumer-price-inflation-summary--january-2014.html)
In response to: “What percentage do you think this rise will be?” The average was 1%. For those earning over £45,000 a year (top 10%), the average pay rise will be 2.4% %, for those earning under £7,500 a year (bottom 10%) the average was 0.5%. Those in the private sector will receive a 1.3% increase, the public sector will receive 0.7%. It was 1.7% for teachers and 1.5% in the IT sector. All responses exclude those who answered “Don’t know” when asked if they expected a pay rise in 2014. Averages are a combination of asking those who have already received a pay rise in 2014 how much it was and those who expect a pay rise in 2014 how much of an increase they expect. 55% of respondents (excluding those answering “Don’t know” do not think they will receive a pay rise in 2014.
In response to “Thinking about 2014, do you think you will get a pay rise in your CURRENT JOB by the end of this year?” 45% said “Yes, I have already received a pay rise since January 1st, 2014” or “Yes, I think I will receive a pay rise during 2014”. Percentage excludes those respondents who answered “Don’t know”
In response to: “In the last 12 months has your pay overall been raised, cut or frozen?” Excluding those who said “Don’t know/can’t remember”, 46% said “I have had a pay freeze in my current job”. For those over the age of 55 it was 52%, those aged 35-54 it was 46% and those 18-34 it was 36%.
We asked those who currently have a pay freeze “For how long has your pay been frozen?”,15.5% said that it had been frozen for either “25-36 months (3 years)” and “More than 36 months (3 years)”
In response to: “Thinking about 2014, do you think you will get a pay rise in your CURRENT job by the end of this year?”. Percentages exclude those respondents who answered “Don’t know”
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UK average
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North East
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North West
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Yorkshire & Humberside
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East Midlands
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West Midlands
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East of England
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London
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South East
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South West
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Wales
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Scotland
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Percentage of people getting a pay rise in 2014
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45%
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54%
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47%
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53%
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48%
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49%
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44%
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50%
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39%
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38%
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32%
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40%
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7. In response to: ‘If you were offered a job that paid more than your current one but was based in a different region / part of the UK, do you think you would consider taking it?’ 46% of those aged between 18-34 said they would consider it, 21% of those aged 55+ said they would. 8. In response to: “In the last year has the number of hours you work per week gone up or gone down?”, 7% said “Gone up a lot”, and 18% said “Gone up a little”. 9. In response to: “Which of the following best describes how you feel in general about your personal financial situation?”, 53% said “Very concerned” or “Quite concerned”. 10. In response to: “Thinking about the next 12 months, do you expect your personal financial situation to get better or get worse?”, 20% said “It will get a lot worse” or “It will get a little worse”. 40% of 18-34 year olds said “It will get a lot better” or “It will get a bit better”, but 24% of those over the age of 55 said “It will get a lot worse” or “It will get a little worse”. 11. According to Uswitch.com, consumers can save £1,838 by switching their essential household bills.
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Uswitch is the UK’s top comparison website for home services switching. Launched in September 2000, we help consumers save money on their gas, electricity, broadband, mobile, TV, and financial services products and get more of what matters to them. Last year we saved consumers over £373 million on their energy bills alone.
Uswitch is part of RVU, a new business that also owns Money.co.uk and Bankrate.
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