Richard Cooper, marketing director at VocaLink, said, "Weakening inflation and employment prospects have caused earnings growth to decline significantly, as shown by a two year low in the VocaLink take home pay index. The dramatic fall in industry pay also illustrates that, as the recession worsens, the credit crunch is now being felt the hardest in the capital intensive manufacturing sector."
Commenting on the latest VocaLink take home pay index, Douglas McWilliams, chief executive of economics consultancy cebr, said, "Inflation is collapsing, to the extent that we expect it to turn negative over the next quarter. Whether the UK is in for a prolonged period of deflation resulting from the commodity price collapse remains in the balance. The extent to which wages are bid down, as indicated by the VocaLink take home pay index, will be a key determinant in this."
VocaLink processes over 90% of UK salaries and the VocaLink take home pay index, established in 2004, 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.
