VocaLink Take Home Pay Index Starts on Road to Recovery Following All-time Low

By Vocalink, PRNE
Tuesday, April 6, 2010

The VocaLink Take Home Pay Index recovers from its lowest level on record of 1.0 per cent in February to reach 1.5 per cent in March

LONDON, April 8, 2010 - The VocaLink Take Home Pay Index for March has recovered from
its all-time low in February to record a rise of 0.5 percentage points,
bringing the index to 1.5 per cent. The rise has been significantly aided by
a strong rebound in manufacturing sector pay growth which increased by 0.9
percentage points in March. However, even though the economic recovery is
underway, there is still significant spare capacity in the economy. As a
result, since March last year, the VocaLink Take Home Pay Index has
stabilised between a 1.0 per cent and 2.0 per cent range, which is
significantly lower than the 4.0 per cent pre-recession average.

As regards to manufacturing, the VocaLink index rebounded sharply in
March to 1.3 per cent from its record low level of 0.4 per cent in February.
This index now stands at the average level experienced in 2009, though still
significantly lower than the 3.2 per cent average level of 2008. Much of this
recent improvement in the manufacturing sector is due to the turning
inventory cycle, which is expected to provide a boost to overall economic
growth in the first quarter of this year. However, it is unclear whether this
rise in manufacturing output will be temporary or sustained.

Meanwhile, the VocaLink services index edged up by 0.2 percentage points
to 1.5 per cent in March. Despite being above the VocaLink manufacturing
index, the services index remains a full two percentage points below its
average level over the past five years of 3.5 per cent. The main reason for
this relative underperformance is the excess capacity in the economy.

Marion King, Chief Executive Officer at VocaLink, said: "Arguably, UK
employers are using wages, instead of employment, to control costs much more
so than in the past. As a result, wage growth remains at a structurally lower
level; this trend is set to continue throughout 2010 as employers put off
making long-term decisions around raising employment and/or wages."

Douglas McWilliams, chief executive of economics consultancy
cebr, said: "While the rise in March's VocaLink Take Home Pay Index is a
large move relative to the level of the index, it acts to merely take the
index to the midpoint of the 1.0 per cent to 2.0 per cent range that it has
been fluctuating in since March 2009. It is clear that wage growth will
continue to remain at historically depressed levels until upward pressures
emerge from significant rises in employment."

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 continuation measure a year earlier. It is affected by changes in tax
rates, National Insurance and other employer payments or deductions.

Note to Editors:

The VocaLink Take Home Pay Index 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 due to be
announced on Thursday 8 April 2010.

Follow this link to read the full report, available from Thursday 8 April
2010

www.vocalink.com/thpi0410rep

Methodological notes

The average payment per employee is estimated from the total value of
payments and the number of transactions and then expressed as an index for
each month. The data uses a 3-month moving average to mitigate seasonal
variations and looks at the year on year increase to provide a fair economic
indicator that is also comparable with other data.

While the FTSE 350 sample is largely representative of the corporate
economy in the UK, when comparing the VocaLink take home pay index data with,
for example, government statistics, it is important to take into account the
fact that some trends, which affect relatively larger firms differently, may
have a disproportionate impact on the VocaLink take home pay index compared
with the government's official Average Earnings Index (AEI). For example, the
VocaLink index does not include the public sector so when pay trends in the
public sector are different from those in the private sector, this will
affect the VocaLink index differently from the AEI.

The VocaLink Take Home Pay Index is based on take home pay data. It is
therefore affected by changes in tax rates, changes in National Insurance
contribution rates and changes in other employer payments or deductions. It
is therefore a more representative indicator of disposable income for salary
earners than data that does not take this into account.

For further information, please contact:

    The VocaLink Take Home Pay Index series

    Three month average annual change
    Year                                2009                      2010
    Month              Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

                       %   %   %   %   %   %   %   %   %   %   %   %   %
    VocaLink Take Home 2.0 1.6 1.1 1.3 1.3 2.0 1.7 1.7 1.4 1.9 1.4 1.0 1.5
    Pay Index
    VocaLink           1.2 1.4 1.1 1.3 0.5 0.8 0.9 1.5 2.0 2.0 1.1 0.4 1.3
    manufacturing
    index
    VocaLink services  2.4 1.7 1.0 1.2 1.9 2.8 2.1 1.8 0.9 1.7 1.6 1.3 1.5
    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, the UK body responsible for clearing and settlement. This
includes 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.

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.

About VocaLink

VocaLink is a specialist payments partner to banks, their corporate
customers and government departments.

We design and deliver smarter domestic and international automated
payments systems, and smarter ATM switching solutions.

In fact, our switching platform connects over 60,000 ATMs, the world's
busiest network, while our payments platform processes over 500 million
payments per month.

Having pioneered electronic payments for over 40 years it's perhaps no
surprise that many major organisations have come to rely on our services.

For example, our Real-time Payments Platform is the central
infrastructure for the UK's Faster Payments Service, whilst we've partnered
with BGC, Sweden's leading payments provider, who now outsource the majority
of Sweden's domestic payments to us.

We are very proud of our service delivery record. Our platforms operate
on never-fail technology to ensure total reliability and availability 24
hours a day allowing us to meet our customer needs.

In short, our smarter payments capabilities offer banks, corporates and
government departments reach throughout SEPA and beyond.

VocaLink. Safer payments, smarter partner.

About cebr

Centre for Economics and Business Research ltd is an
independent consultancy with a reputation for sound business advice based on
thorough and insightful research.

Since 1992, cebr has been at the forefront of business and
public interest research. Providing analysis, forecasts and strategic advice
to major UK and multinational companies, financial institutions, government
departments and agencies, trade bodies and the European Commission.

Cebr is recognised as one of the country's leading independent
commentators on economics and business trends. Its forecasts are used by a
diverse audience of business people, policy makers and journalists; even the
Treasury publishes its predictions for the UK economy.

    Suzanne Hewitt, Hotwire

    +44-(0)20-7608-2500 or vocalinkuk@hotwirepr.com

    Deborah Souter, VocaLink Limited

    +44-(0)870-920-8651 or deborah.souter@VocaLink.com

    If you would like to receive the monthly press release please e-mail
    vocalinkuk@hotwirepr.com or deborah.souter@VocaLink.com

Suzanne Hewitt, Hotwire, +44-(0)20-7608-2500 or vocalinkuk at hotwirepr.com, Deborah Souter, VocaLink Limited, +44-(0)870-920-8651 or deborah.souter at VocaLink.com. If you would like to receive the monthly press release please e-mail vocalinkuk at hotwirepr.com or deborah.souter at VocaLink.com

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