Biggest pay rise boom in Europe for UK workers

Workers in the UK are likely to enjoy wage increases in real terms this year after suffering long periods of below inflation increases.

The latest Salary Budget Planning Study from Towers Watson UK workers will see the first real wage rise since 2007 this year, and only Germany will rival the UK level.

Best in Europe

Mostly based on private sector company data, the study reveals that the average pay rise across the UK economy is expected to be 3% this year, whilst annual inflation comes on at a record low of 0.2%.

This means the real-term effects will outstrip wage rises for all other major European economies.

In Germany, average pay rises are expected to be 2.9% this year, with a slightly higher inflation level of 0.6%.

Head of Towers Watson's data services practice for EMEA Paul Richards said: "In 2015 many employees will feel the tide has turned. A combination of decent pay rises and record-low inflation means that British employees are starting to see a real rise in their income after years of frustration. The outlook in the rest of Western Europe is more muted in terms of pay rises, but in all of these countries pay rises are set to significantly outstrip inflation, which has not always been the case over the last few years."

2016 outlook

The UK predictions for 2016 look similar in terms of wage increases, although a steep rise in inflation is expected, up from 0.2% to 1.5%.

"Even if inflation rises to 1.5% next year as expected, this is still a historically low level. By comparison, between 2011 and 2013 we were experiencing annual inflation of between 2.5% to 4.5% and pay rises that barely matched or were significantly below, so 2016 is still expected to see a healthy real-terms growth in wages," Richards explained.