Employees are taking home more than £1,200 less pay compared to three years ago, according to research by VocaLink.
The VocaLink Take-home pay index shows that both public and private sector pay outlooks are fragile, while overall take-home pay has fallen by £1,212 since the end of 2008.
Income after tax and deductions in the private sector fell by 2.9% in the three months to July, down 3.3% for the three months to June.
The outlook for public sector pay also remains gloomy, with workers facing a steady decline in pay growth since April this year, when pay freezes came into force for many.
Annual growth on the VocaLink Public sector take-home pay index stands at 1.3% in July, the same rate as June and the slowest of all the pay sectors.
Marion King, chief executive officer at VocaLink, said: “With pay growth failing to keep up with rising inflation, household spending power continues to fall, which is a key contributor to the weak economic growth in the UK at present.
“Pay growth remains weak for both public and private sector sector workers. Across the public sector we are seeing the true bite of pay freezes while the positive impact of income tax changes is being partially offset by the weakness of gross earnings growth in the private sector.”
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