Private sector employees in Britain experienced real terms pay increases for the second year in a row in 2016, according to the latest salary budgeting survey from Willis Towers Watson. The study, which is carried out twice yearly, shows that average UK pay rises of 3%, combined with inflation of 0.4% for the first half of 2016, outstripped those obtained by workers in many other major European economies.
The outlook for UK pay growth in 2017 is very similar, although a fluctuating pound and uncertainty caused by Brexit, combined with predicted rising inflation, could mean that real terms wage growth may not be as high as in recent years.
Iain Nichols, Senior consultant at Willis Towers Watson’s data services practice, said:
‘It will be interesting to see how companies react to increasing inflation. We predict there will be greater emphasis on pay rises to high performers, emerging talent and those with in-demand skills, and less emphasis on across-the-board increases. Without differentiation, companies may face retention and attraction pressures, especially in high demand areas.’