• Growth in take home pay edges up to 3.3 per cent, according to Voca
• Latest round of pay negotiation pushes up pay growth in service sector
• However, manufacturing pay growth falls dramatically to all-time low

6 February 2007: The Voca take home pay index  shows that growth in take home pay has increased to 3.3 per cent in January (December: 2.9 per cent). The index has been boosted in part by Christmas bonuses and increased use of temporary workers, and suggests that the latest round of pay negotiation may already be having an effect.

The Voca services sub-index, which reflects take home pay growth in the services sector, strengthened to 4.6 per cent from 3.2 per cent in December. However, the Voca industry sub-index, which reflects take home pay in the manufacturing sector, fell for the sixth month in succession to 1.5 per cent in January from 2.2 per cent in December.  This is an all-time low and reflects the struggling manufacturing sector.

Richard Cooper, head of marketing and communications at Voca, said:
“Take home pay growth has rallied over the last months from November’s all-time low as we see the impact of Christmas bonuses and the January pay round. However, the industry index has hit a new all-time low, and growth in take home pay continues to lag behind the Retail Price Index.”

Douglas McWilliams, chief executive of cebr, the economics consultancy which analyses the index for Voca, said:
“Consumer confidence in 2006 was held up by the buoyancy of the housing market, but recent data shows signs of a slowdown which could dent spending. However, this month’s Voca take home pay data suggest that wage increase demands have already started to materialise, giving the Bank of England ammunition to raise interest rates again this week in order to combat inflation.”

Voca processes over 90 per cent of UK salaries and the Voca take home pay index is the most timely and accurate disposable income data available in the UK.  It is based on actual payments made to employees on a three-month moving average compared with the same measure a year earlier.  It is affected by changes in tax rates, National Insurance and other employer payments or deductions.

To read the full take home pay index report, please click here.