Fortunes of UK workers diverge as many miss out on pay rises

By Reuters

Feb 15, 2015 07:16 PM EST

Two fifths of British workers landed significant pay rises last year but a similar number endured stagnant salaries as the fortunes of the workforce diverged sharply, a human resources organization said on Monday.

The Chartered Institute of Personnel and Development (CIPD) warned of a "tale of two workforces" as its quarterly labor market report showed 40 percent of employees enjoyed pay rises of 2 percent or more while 39 percent saw their pay frozen and 3 percent suffered pay cuts.

Another 18 percent received a pay rise between 0.1 percent and 2 percent in the year to December.

The findings suggest that a large part of the British workforce is still feeling the pinch ahead of national elections in May, even though the average wage increase has outpaced inflation in recent months.

"The figures show a clear gap between employees that have comfortably exceeded the current inflation rate in their pay packets and those who haven't seen any increase at all," CIPD analyst Gerwyn Davies said.

That may help explain why Prime Minister David Cameron's Conservative Party is still narrowly trailing the opposition Labour Party in most polls, despite the UK's headline economic performance being among the strongest in Europe.

The CIPD survey showed public sector workers were hit the hardest, with 54 percent of public employers saying their wages were frozen.

The Bank of England said on Thursday it expected below-zero inflation in coming months.

Manufacturing firms were among the strongest performers with 54 percent reporting pay hikes of 2 percent or more, but more than a third of manufacturing and production firms froze pay.

Davies said firms across all sectors were more likely to have awarded large pay increases if their strategy was to maximize value rather than trim costs.

"Therefore, the role for government is ... to understand the levers that can help more firms increase their workplace productivity and move up the quality chain," he said.

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