Average pay rises FINALLY beat inflation for the first time in five years - but FTSE bosses see salaries leap nearly 14%

New year pay rises were up 2.5 per cent on average: XpertHR survey

Median pay rises across the economy in 2013 were worth 2 per cent

But average pay of FTSE 100 executive director up 13.6 per cent since 2008

Average pay rises have finally begun outpacing inflation for the first time in five years, a report showed today.

A survey of 70 recent pay awards showed new year pay rises were 2.5 per cent on average, up from 2 per cent at the end of 2013 and 0.5 per cent higher than consumer price inflation, which official figures showed last week had fallen to 2 per cent at the end of 2013.



Pay specialists XpertHR said pay rises were awarded within a wider range compared to last year, with the middle half of agreements falling between 2 per cent and 2.8 per cent.



Why always Barclays: Once again Barclays Bank is making headlines for all the wrong reasons as a study found pay awards for its senior executives failed to reflect its poor performance in recent years

Median pay rises across the economy in 2013 were worth 2 per cent, the fifth consecutive year of low pay awards, the report showed.



But those pay rises were dwarfed by the average pay award for the bosses of Britain’s top companies.



A separate report released today from independent researchers Verum found that, in the four years immediately following the 2008 financial crisis, the average pay of a FTSE 100 executive director rose by 13.6 per cent, to £1.45million – more than treble the increase in average UK earnings over the same period.



XpertHR Pay and Benefits editor Sheila Attwood said: ‘Pay awards ended 2013 on a subdued note, but there are encouraging signs from the first of the 2014 pay deals that have been concluded.

‘The 2.5 per cent median pay award in January 2014 is the highest level for almost two years, but it is too early to say whether this pick-up in pay awards will strengthen further.’

TUC General Secretary Frances O'Grady said: ‘It's great that the longest real wage squeeze in over a century could finally end this year.



‘But with working people thousands of pounds worse off than they were four years ago, it'll take several years of strong pay growth to make up the damage that's been done to their living standards.



‘Working people have borne the brunt of recession and stagnation so government and employers have a duty to ensure that they receive a fair share of the benefits of recovery, through decent wages for all.’

Frances O'Grady : The TUC General Secretary said: 'Working people have borne the brunt of recession and stagnation so government and employers have a duty to ensure that they receive a fair share of the benefits of recovery, through decent wages for all.'

Earlier today the government claimed workers were seeing their wages rise in real terms by around 2.5 per cent thanks to increases in the personal tax allowance, outpacing CPI inflation of 2.4 per cent for the whole of 2013.

The government said only the top 10 per cent of earners had not seen real wage rises keep pace with inflation.

Labour accused the government of being highly selective with its figures.

Speaking to the BBC from the World Economic Forum in Davos Prime Minister David Cameron said: ‘We are cutting people's taxes so we are seeing some positive signs on take-home pay but it's going to take time and we need to be patient and work through our long-term economic plan so it's a recovery that really lasts and that benefits everyone.’

Verum's study found the gap between executive pay and company performance had also widened in the last four years.



It measured the difference between UK companies’ financial performance – based on a range of indicators – and changes in top bosses’ pay.



The report singled out Barclays Bank and Lloyds Banking Group as the two worst offenders on the FTSE 100 with pay awards for senior executives at the two banks failing to reflect their less than stellar performance in recent years.



Banks in particular have faced heavy criticism over bonus payments within their investment divisions and faced accusations of rewarding failure. Energy firms such as Centrica, the owner of British Gas, have also come under fire over executive pay awards.



But Centrica topped Verum's index suggesting executive bonuses were justified despite customer anger at inflation busting energy price hikes last November, which prompted chief executive Sam Laidlaw to say he would not take his bonus for the year.



‘From an investor perspective, there is real concern that bonuses and incentives have become detached from performance, that they have become almost part of fixed pay,’ said Robert Macnab, Verum’s spokesman.



Verum said Barclays came bottom of its index because of weak return on equity, poor cash flow as a percentage of profit and profit after tax.



But it also noted that the bank’s average executive pay grew rapidly in the three years to 2011-12 to more than double the FTSE 100 average. Although average pay fell back in 2012-13, it was still well above the FTSE 100 average.



Lloyds performed poorly across almost all Verum’s performance measures but especially in terms of profit after tax. Its average executive pay also grew rapidly year-on-year, remaining well above the FTSE 100 average throughout the period.

