Private-sector employers expect to give their employees a pay rise of 2% in 2016, according to XpertHR's latest survey. Questioning employers on their intentions for pay awards scheduled in the next 12 months, the median level cited was 2%. Half of pay awards are expected to be worth between 1.5% and 3%. More than a quarter (28%) of pay awards are expected to be at exactly 2%, ‘demonstrating the dominance of this figure in the range of awards’.
These figures are in line with the latest readings from XpertHR, which has recorded a median 2% pay award in the private sector in the three months to the end of February 2016. On its rolling quarterly measure, pay awards have been pitched at 2% since April 2014.
There is, of course, a different picture in the public sector, where employees are subject to the government's policy of pay awards worth 1%. However, across the economy some employees will receive a rise well in excess of the 2% benchmark. Those paid at the national minimum wage level will receive a 3.7% pay boost following the announcement that the hourly rate for 21- to 24-year-olds will increase from £6.70 to £6.95 from 1 October 2016. Employees aged 25 and over will move to the new national living wage rate of £7.20 an hour from 1 April 2016.
XpertHR pay and benefits editor Sheila Attwood said:
‘Pay awards are set to remain subdued for yet another year, and a long way off the nearly 4% rise recorded just before the recession hit at the end of 2008. The labour market is creating pinch points around particular skills and roles, which employers are having to address through additional pay in order to recruit and retain the candidates they need. Additional pressure from an above-inflation increase to the national minimum wage in October only serves to reinforce our view that the headline pay award will not rise above 2% this year.’