Ex-BSkyB Reward Chief: 'Incredulous' that Employers Have Not Hiked Wages

We're in a "cost of living crisis" - that is undeniable.

Average earnings adjusted for inflation have dropped 7.2% since 2010, according to the Trades Union Congress (TUC).

Wages just haven't kept pace with the cost of living hence the fall in earnings in real terms.

This picture will be improved if inflation continues to fall. Whether inflation can fall continually much further is questionable.

This leaves the rate of pay as the main variable that can shift the dial on the cost of living crisis.

Average pay rises do look like they will rise this year, but not anywhere near enough to close the gap to restore real pay to its 2010 levels. So should employers do more on pay increase levels?

How you answer that depends on which world you live: "continual austerity world" or "real data world".

People living in an austerity world will no doubt say things like "times are tough" and that we can't risk a fragile recovery without continuing to make "tough decisions" like restraining pay.

This is a zero sum world in which job losses or lower profitability offset pay increases.

However, in "real data world" it seems incredulous that pay hasn't risen strongly and that we have a cost of living gap.

A "real data" scoreboard would look like:

• Profits: UP - Private non-financial companies' profitability was estimated at 11.7% in Q4 2013, at the higher end of the range experienced during the last five years, according to the Office for National Statistics (ONS).
• Corporate Tax: DOWN - Corporate tax rate has fallen from 28% in 2010 to 21% and will fall to 20% in 2015, according to data from KPMG.
• Dividends: UP - FTSE 350 companies are expected boost ordinary dividend payments to 4.4% higher than the previous year, according to research from Markit.
• Executive pay: UP –Yes, it seems to have slowed a bit last year with base salary increases of around 3%, but let's not forget executive pay has increased by 74% over the past decade, according to High Pay Centre figures.

So, basically everyone's up on five years ago, except one group, the vast majority of Britain's workforce.

The taxpayer is picking the cost of this with a higher benefits bill to subsidise companies' lower wages.

For instance, research from the Living Wage Commission revealed that 6.7 million of the 13 million people in poverty are in a family where someone works – more than half for the first time.

What pay increase any employer makes is clearly an individual decision for them based on a host of factors.

However, the next time you see someone defending why UK Plc as a whole should restrain pay, ask yourself how much of that is based on real data and how of that is an excuse to continue channelling the benefits of growth to an elite?

Dev Raval is a former director of reward at BskyB. He has also held executive compensation positions at Vodafone and GlaxoSmithKline.