UK employees are in line for a 1.3% pay rise in real terms next year, according to a new report.
The findings from ECA International indicate that businesses are expected to repeat a nominal 5% wage increase in 2024, which will equate to an income boost of around £447 per worker based on the average annual salary of £34,372.
If inflation drops to 3.7% as anticipated, the mobility company’s latest annual Salary Trends Report suggests this would be the highest real-terms rise since the 1.7% awarded in 2020.
This year’s research found that in terms of predicted pay increases, the UK exceeded the 1% global forecast, ranking twenty-eighth worldwide and seventh in Europe.
Oliver Browne, ECA’s remuneration and policy surveys manager, said: “UK workers have had a difficult few years, with the economic impact of the Covid-19 pandemic immediately followed by the surge in inflation after Russia’s invasion of Ukraine wiping out any real-terms gains of their pay increases. Now that inflation is finally expected to fall below 4%, employees in the UK should be able to look forward to their first real-terms pay increase since 2020.”
The research, which has been carried out for 23 years and looks at more than 360 multinational companies’ data in 68 countries, calculates real-term salaries by subtracting the inflation percentages from the nominal salary percentage rise anticipated by firms in each location.
Browne added: “With inflation so high, many businesses in the UK have been unable to offer their employees pay awards to match. Nominal increases are expected to remain higher than usual next year despite falling inflation, suggesting some companies may instead be spreading larger increases over a longer period.”
According to the data, Europe’s forecast lags behind other regions and its prediction is less than the 2.2% rise expected in Asia next year.
Browne concluded: “Asian countries have been comparatively less affected by the spikes in inflation witnessed elsewhere, with particularly low inflation in China having a knock-on effect in many other countries in the region. As a result, despite not seeing the highest nominal salary increases in the world, the real-terms effect is greater.”