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Take-home Pay Growth 'Stagnating'

The benefits of getting the best careers advice have been highlighted by a study which showed a drop in the annual rate of increase in take-home pay.

The benefits of getting the best careers advice have been highlighted by a study which showed a drop in the annual rate of increase in take-home pay.

Average annual growth dropped to 1.4% in January from 1.9% during the previous month, according to specialist services provider VocaLink.

The biggest reductions were in the manufacturing sector, while services firms, despite seeing the highest increases, suffered a fall from 1.7% in December to 1.6% last month.

Wage growth may be starting to "stagnate" because of the slower-than-expected recovery from the financial crisis, the study added.

VocaLink chief executive Marion King said: "Although we are now technically out of the recession in the UK with the last official GDP estimate, pay growth rates are not going to return to those pre-recession levels for quite some time.

"Stagnating salaries combined with the restoration of the 17.5% Vat rate are going to have a real impact on households' spending power."

Douglas McWilliams, chief executive of economics consultancy cebr, predicted that the labour market would continue to remain sluggish for "quite some time".

He added: "Following the VAT cut reversal, we expect a period of rising inflation without a corresponding increase in pay growth which will further limit disposable income for the foreseeable future."

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