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Pay freezes continue in private sector

Despite the fact that the UK economy would appear to be moving in the right direction, at least 20% of the UK private sector workforce are still the subject of pay freezes. Even though the average pay rise has increased from 1.3% to 2% over the last three months this is well below inflation and effectively reducing the spending power of the UK workforce. So when will pay rises at least start to match inflation?

While historically the rate of inflation has been central to any pay awards in the private sector this has not been the case for some months now. The fact the Bank of England believes inflation will fall back in the latter part of 2010 and the fact the UK economy is still relatively unstable are two vital factors which have led to large scale pay freezes and below inflation pay rises. We are likely to see significant pent-up demand for pay increases once the economy is back into a growth phase but unfortunately it is very difficult to forecast when this might happen.

A reduction in the cost of running both public sector services and private sector businesses is a vital element of the overall economic recovery plan which the UK government is attempting to put in place.

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