UK workers to receive the lowest salary increases in Europe in 2018

Despite unemployment continuing to be the lowest it has been in more than 40 years, British workers are expected to receive one of the lowest salary increases across Europe as we come into the new year, according to the latest Salary Trends Report. The report by ECA International has shown that the UK is trailing far behind its peers on the continent, with some countries expected to be increasing salaries by up to 15 times.

UK employees in the private sector are expected to see a real salary increase of just 0.2% in 2018, the equivalent of approximately £4.41 a month, or £53 a year before tax. This keeps the UK at the bottom of the salary increase table in Europe, ranking 23rd out of 26 countries surveyed in the region. Only employees in Hungary, Poland and Ukraine are anticipated to have lower real salary increases than those in the UK.

Although there are early signs of growth in some major European economies, expected real salary increases still lag behind those of a few years ago. Real wage growth in Germany and France is expected to be less than half the rate of 2015 at 1.2% and 0.9% respectively. Russia is forecast to move to the top of the European rankings in 2018. As its economy stabilises and inflation falls, employees in Russia are set to receive a 3.1 percent real salary increase next year.

After seeing the highest real salary increases in Europe in 2017, inflation is expected to move higher in Romania. This will cause the country to see real pay rises of just 0.7% next year, compared to 3.4% in 2017, and fall 46 places in the global rankings. Ireland and Hungary face a similar situation, falling 18 and 21 places respectively.

“Productivity growth in the UK has remained low in recent years so employers have not been able to offer the level of salary increases that they have been able to in the past,” said Steven Kilfedder, Production Manager at ECA International. “This, combined with higher inflation, which is expected to be 2.6 percent next year, has caused something of a pay crunch for UK workers.”

Are you concerned about a lack of real salary growth across the country, or is your business ahead of the curve? Let us know on Twitter, Facebook or LinkedIn.