LONDON (Reuters) - British companies gave staff an average 2 percent annual pay rise in the three months to the end of January, unchanged from a year earlier, according to data on Thursday which offered little sign that employees will be shielded from rising inflation.
Human resources consultants XpertHR said average pay rises in January - the second most common month for them to take effect - was unchanged from January 2016 and represented only a marginal increase from the average 1.9 percent recorded in the final three months of last year.
"The latest data demonstrates the caution that employers are exercising when it comes to pay awards for their employees. Despite steady economic growth and rising inflation, there are no signs that pay award levels will increase greatly this year," XpertHR analyst Sheila Atwood said.
Sterling has fallen more than 15 percent against the dollar since June's Brexit vote, and Bank of England Governor Mark Carney said on Tuesday that this was the sole reason why he expected inflation to overshoot its 2 percent target this year.
Low inflation helped boost real earnings growth last year, but with the BoE forecasting inflation will exceed 2.7 percent by the end of the year, households' incomes look set to stagnate, potentially weighing on economic growth.
Average pay growth in Britain has been weak since the 2008 financial crisis, reflecting weak productivity and a big rise in the number of low-paid jobs, and rose 2.6 percent year-on-year in the final three months of 2016.
Earlier this month, the BoE said that firms it had spoken to expected to lower their average pay offer to 2.2 percent this year from 2.7 percent in 2016.
This was partly due to difficulties passing higher costs on to customers, but also due to a smaller increase in the minimum wage and a new levy to fund apprentices.
Separately, the Resolution Foundation think tank said one reason for weak pay growth among workers born in the mid 1980s was their reluctance or inability to change employer.
A job change in a person's mid-20s typically brought a 15 percent pay rise, but the proportion of people doing so in any one year had halved compared with 10 years ago.
"One of the most striking shifts in the labour market has been young people prioritising job security," said Resolution Foundation analyst Laura Gardiner.
"This may be understandable in a jobs market characterised by rising temporary work and zero-hours contracts. But with ... evidence that employers have essentially stopped rewarding their long-serving staff with real annual pay increases, such job loyalty can be very costly."