UK salaries are forecast to increase by 1.3 percent in 2024 in real terms according to the latest annual Salary Trends Report by global mobility expert, ECA International (ECA).
This equates to an average salary boost of £447 in real terms as UK businesses expect to repeat a higher than usual nominal pay increase of 5 percent.
If UK inflation does fall to the predicted 3.7 percent, it could mean UK workers see the highest real-terms increase since the 1.7 percent received in 2020.
Those on a £34,372 annual salary will see their payments boosted by approximately £447 a year.
The UK ranks 28th globally and 7th in Europe for real-terms salary increases forecasted next year, outpacing the expected average global rise of one percent.
Real salary increases are calculated by subtracting the relevant inflation percentage from the nominal salary percentage increase forecasted by businesses in each country.
Oliver Browne, Remuneration and Policy Surveys Manager at ECA International, said: “UK workers have had a difficult few years, with the economic impact of the COVID-19 pandemic immediately followed by the surge in inflation after Russia‘s invasion of Ukraine wiping out any real-term gains of their pay increases.
“Now that inflation is finally expected to fall below four percent, employees in the UK should be able to look forward to their first real-terms pay increase since 2020.”
UK inflation is falling more slowly than in Germany, Switzerland and Italy, but as the nominal salary increase forecasted by businesses in the UK is higher, researchers found the UK overtakes them in rank for real salary increases next year.
Real salaries in the UK are anticipated to outperform those in many other European countries, rising 0.4 percent higher than the 0.9 percent European average.
Browne added: “With inflation so high, many businesses in the UK have been unable to offer their employees pay awards to match.
“Nominal increases are expected to remain higher than usual next year despite falling inflation, suggesting some companies may instead be spreading larger increases over a longer period.”
Although inflation continues to fall, Europe is expected to continue to trail behind the rest of the world for real-terms pay increases at 0.9 percent on average, compared to Asia-Pacific’s forecasted 2.2 percent average increase.
Employees in Europe are forecast to receive the lowest global nominal pay increase on average next year.
