The gap between pay deals in the public and private sectors is widening, new figures show.
Public sector increases last month were around 3%, while in private companies workers were given pay rises averaging 3.5% – with some receiving as much as 10%.
Pay analysts Incomes Data Services said wage rises were being held down in some companies because of large financial contributions being made to pension funds.
Workers were more likely to accept pay rises linked to inflation if their pension scheme was also topped up.
Alastair Hatchett of IDS said: “Private sector pay increases have risen in response to higher inflation but settlements remain modest given tight labour markets.
“Employees may well be prepared to accept modest pay increases if the employer is simultaneously paying substantial sums to secure the future of the pension fund.”