New research from pay analysts XpertHR has shown wage increases sitting above 2% “for the longest period of time since 2008”. Pay rises seemed as dead as a dodo just after the recession hit; however, in recent years, employers have slowly cottoned on to the fact that they need to pay more to retain talent and to ensure their workers can afford to live.

The survey shows current pay increases averaging between 2% and 3%. This is up from last year, where the average was somewhere between 1.5% and 2.3%. The manufacturing and production sectors have seen the best rises since 2012, at a steady 2.6% average, and the service industry is commonly enjoying a 2.5% pay rise – a figure that experts believe will prove the benchmark for all sectors across 2018.

Workers within the NHS could see a huge boost to their pay, now that the Government has finally made a decision after eight years of wrangling over wages. The maximum pay increase for these employees could reach 29%, with new starters benefiting the most. Any boost, however, would be over a period of three years, and the decision comes with a caveat and a change of approach, which will make future wage increases less automatic, in order that savings can be made long-term within the health service. This move will affect more than a million people, but the GMB still believes that the proposals ‘fall below the expected increase in inflation’.

Even the Bank of England supports the theory that workers will be better off in 2018; their own research predicts an average wage increase of 3.1%, which compares favourably to 2.6% in 2017. Surprisingly, there’s one industry that doesn’t predict a rise in 2018, despite it enjoying a boom over recent years: construction.

Lower-paid workers will also see a little more in their bank accounts, after the National Minimum Wage was increased last month - a move that will benefit more than two million employees.
So, is prosperity really rearing its head? Are these figures a result of employers’ generosity, or are companies just resigned to the fact that these increases are well, well overdue? How do UK workers fare against the rest of Europe?

Hmm. Not too well. Entry-level professionals in the UK, according to Willis Towers Watson’s latest report, who start out with an average salary of £26,000, come out in 14th position when compared with their counterparts in the top 20 European countries. Considering the same employee in Switzerland, the country at the top of that table, would receive £68,959 in the same position, it doesn’t sound much to write home about. That said, taxes and living costs are reportedly much lower in the UK in comparison, which is some comfort. Middle managers fare slightly better, coming out 10th in the table, on an average salary of £69,480.

Pay is a personal subject, indeed. And one that is aligned to an individual’s expectations. Take, for example, the disparity between the earnings of the rich and the poor in the UK, which is the subject of many a debate. Amongst the top 1% of earners, apparently, there is still reason to feel disgruntled with your pay. “Top income earners experience ‘relative disadvantage’,” the Relational Analysis of Top Incomes and Wealth report states. “They are disadvantaged compared to others at the top, whilst also being aware of their advantage compared to the general population.” Some believe they should be taxed more, whereas others surveyed think ‘high earnings’ constitutes millions in their pay packet each year.

It’s all relative to where you’re standing. If you live on a modest estate far north of London, earning £100k a year would be regarded a very good wage. However, inside the capital’s bubble things could look very different, and the top earners tend to be inside this bubble. Says Katharina Hecht, a PhD researcher in the LSE’s Department of Sociology, “Members of the top 1% are often working for the top 0.1%. Regular exposure to their employers’ lives and lifestyles can create feelings of disadvantage and an aspiration to earn more. While the top 1% may recognise their advantage compared to the general population, they experience a feeling of disadvantage when looking upwards.”

We’ve written a few blogs on the subject of pay and perks. What one employee refuses to budge on could be insignificant to another, and there are many ways to make workers feel valued that aren’t primarily monetary. Given that inflation shows little sign of slowing, and that the economy looks to be sustaining growth, it’s surely about time loyal workers were recognised for the salary sacrifices many have made since the recession first hit. Average figures may be up from last year, but few workers would say a 2.5% rise will make the gap between rich and poorer smaller, as the cost of living continues to run away with itself.

As we’ve said, it’s all relative. For a decent wage rise to be possible, it may be that the employer has no choice but to make cuts elsewhere. With that in mind, be careful what you wish for…