Median pay rises set to remain below inflation for four years

Median pay rises are likely to remain below inflation during the next four years, according to research conducted by the Hay Group.

The consultancy forecasts that median salary growth will reach just 2.4% this year. According to the Retail Price Index (RPI) inflation will rise to 5.3%, meaning that pay is falling in real terms for the average British worker for the first time in a decade.

This represents a sharp turnaround after consistent pay increases over the last ten years, amounting to a 37% rise in the median base salaries, or 9.5% in real terms when taking RPI into account.

Steve Paola, reward information consultant at Hay Group, said: “After a decade of real pay boom, recession and continuing uncertainty are having a negative impact on real pay for the UK workforce. It may be a number of years before we see living standards rising at pre-crisis levels.”

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