Employees in the UK will experience a year of above inflation pay rises in 2013, according to pan-European pay data issued by Mercer. UK companies are anticipating employee base pay rises of three percent, the same as 2012 increases.

However, the Bank of England’s estimations for inflation in the UK in 2013 are lower that this figure, so the predicted increases will result in a degree of pressure being taken off household finances across the UK. The data comes from Mercer’s Salary Movement Snapshot which tracks pay plans of 570 multinational organisations operating across 76 countries in EMEA. The data provides information from multinationals on median base pay increases across all employee groups including ‘blue’ and ‘white collar’ workers up to management and Senior Executive level.

Across Europe, the Middle East and Africa (EMEA) the picture is varied with rates of pay inflation for workers in other parts of Europe outpacing that of employees in Western European nations. Across Western Europe, on average, companies are predicting employee pay rises of 2.6 percent in 2013, marginally lower that the average of 2.7 percent awarded in 2012. The data also showed that companies in Eastern Europe were anticipating average pay rises for employees of 4.6 percent, companies in Africa anticipating average increases of eight percent and companies in the Middle East expecting to give employees increases of 5.2 percent in 2013.

“The picture is certainly brighter for the average UK household but the pressure is being relieved more by lower inflation rather than higher pay increases from companies. Businesses are still keeping a tight rein on salary increases,” said Mark Quinn, Partner and pay specialist at Mercer. “The economic situation is still precarious and organisations remain cautious with their fixed costs, such as salaries which make up a very significant part of the cost base of their organisations. What we are seeing is that many companies are implementing low-cost, high value programmes such as employee recognition schemes in an attempt to further reward their staff.”

UK employees are slightly better placed than many of their Western European peers, with companies in the country budgeting for a median three percent pay increase for staff across all employee groups. Employees in Austria, Germany, Greece, Norway and Sweden are also expected to receive comparable amounts. However, this is higher than is being forecast for many other Western European countries, but far lower than is anticipated for staff in some regions of Africa, the Middle East and Central and Eastern Europe. Wage inflation is high in some areas like Turkey and Russia, partly due to economic buoyancy but also due to the high rates of inflation in these countries.