Wage rises drop to two-year low

Wage rises have slumped to their lowest level for over two years, dipping well below the rate of inflation, according to a new report.

Median basic pay rises in the three months to October were 1.8%, compared with RPI inflation of 3.2%, said research group XpertHR.

A study of almost 100 settlements found the first increase in the gap between pay rises and inflation since April.

Employers are predicting slightly higher pay awards next year of 2.5%, said the report.

Sheila Attwood of XpertHR said: "Respondents to our survey reported that controlling paybill costs will be a top priority over the next year, and our latest figures on pay settlements reflect this in practice.

"The dip in the level of pay settlements comes as some companies continue to freeze pay, while those at the top end of the range also remain cautious in their increases - just 8% of pay awards in our latest sample are worth more than 3%, compared with 58% over the same period in 2008, just before the start of the recession.

"We see continued caution in pay setting over the coming year, with 2.5% the expected benchmark pay award."