Take Home pay Growth Falls for the Fifth Consecutive Month

LONDON - The VocaLink Take Home Pay Index Drops to a new Record low of 1.6% in April

- Manufacturing Take Home pay Remains low at 1.2% in April

- Service Sector Wage Growth Falls to an all Time low of 1.7% From 2.4% in March

The VocaLink Take Home Pay Index has declined to a new record low of 1.6% in April from 2.0% in March. This is the fifth consecutive monthly drop in the VocaLink Take Home Pay Index, reflecting the major impact the recession has had on the labour market.

Take home pay growth in the manufacturing sector edged up in April but remained perilously low, with the VocaLink Industry Sub-Index at 1.4% from 1.2% in March. This continues to highlight the collapse in investment, trade and slashing of inventories seen by UK manufacturers in the ongoing recession. Wage growth in the service sector fell to an all time low of 1.7% from 2.4% in March as bonus payments and rising unemployment continue to slow remuneration.

Helen Ritchie, marketing director at VocaLink, said, “The record decline in pay growth in 2009, shown by the VocaLink Take Home Pay Index, significantly raises the threat of deflation and is likely to have a major impact on consumer spending. This could have a negative effect on the retail sector, which will be a further knock to the economy and its ability to recover quickly.”

Commenting on the latest VocaLink Take Home Pay Index, Douglas McWilliams, chief executive of economics consultancy cebr, said, “The unprecedented fall in wage growth so far this year will keep medium term inflation restrained, ensuring that the Bank of England can run a very expansionary monetary policy to ward off the threat of deflation. We expect interest rates to remain at extremely low levels for some time.”

VocaLink processes over 90% of UK salaries and the VocaLink Take Home Pay Index, established in 2004, provides 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.

The VocaLink Take Home Pay Index series Three month average annual change Year 2008 2009 Month Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr % % % % % % % % % % % % % VocaLink 4.2 4.1 4.3 4.5 4.1 4.0 3.4 3.5 2.9 2.7 2.4 2.0 1.6 Take Home Pay Index VocaLink 2.4 2.9 3.9 5.4 4.3 3.1 2.4 2.3 2.4 1.4 1.5 1.2 1.4 Industry Index VocaLink 5.2 4.8 4.6 3.8 3.9 4.3 4.1 3.9 3.0 3.1 2.9 2.4 1.7 Services Index

About the VocaLink Take Home Pay Index

The VocaLink Take Home Pay Index tracks monthly take home pay levels in the UK. VocaLink is the processor for automated payments in the UK on behalf of Bacs, including all Direct Debit and Bacs Direct Credits, which account for over 90% of salary payments delivered into employees’ bank accounts. The VocaLink Take Home Pay Index is compiled using the data captured from the salary payments of 100 of the FTSE 350 companies, courtesy of Bacs.

VocaLink works with the centre for economics and business research (cebr) to deliver the analysis of this powerful and timely indicator of take home pay inflation to economists, analysts and the media. It is an important aspect of the UK’s economic performance and one of the components that drives the Bank of England’s Monetary Policy Committee’s (MPC) interest rate policy. The VocaLink Take Home Pay Index is also split by broad sector group into two sub-indices - the VocaLink Industry Index and the VocaLink Services Index.

Notes to Editors For further information or to receive the full report please contact: Gerald Cross at The JJ Group +44(0)1865-343100 or vocalink@thejjgroup.com Deborah Souter at VocaLink +44(0)870-920-8651 or deborah.souter@vocalink.com

Source: VocaLink

For further information or to receive the full report please contact: Gerald Cross at The JJ Group, +44(0)1865-343100 or vocalink at thejjgroup.com; Deborah Souter at VocaLink, +44(0)870-920-8651 or deborah.souter at vocalink.com