Inflation outstripping pay awards – XpertHR

Employers have given a median 2% pay award to their employees over the three months to the end of May 2017, according to the latest data from pay analysts at XpertHR. This is the sixth consecutive rolling quarter that pay awards have stood at 2%.

Although this represents an upturn on the levels witnessed during autumn 2016, it continues to demonstrate the lack of movement back to the basic pay increases we saw before the recession. In the run-up to 2009, pay awards rose from several years at 3%, up to 3.5% and beyond. Before the recession, the last time pay awards were at 2% for any length of time was in the second half of 1993.

‘The weakness in pay awards is exacerbated for employees by the widening gap between pay rises and inflation . . . Many commentators expect RPI to keep on rising, putting the pay squeeze for employees firmly in centre stage.’

Key findings

• Half of all pay awards are worth between 1.5% and 2.5%.
• 2% is the most common pay award, given to 28% of employee groups.
• 42.2% of pay awards are higher than employees received a year ago, with 33.2% lower.
• The number of pay reviews resulting in a pay freeze remains low, at just under 5%.

XpertHR pay and benefits editor Sheila Attwood said:

‘With inflation wiping out the value of many pay awards, employees are facing on ongoing pay squeeze. Although employers are making positive moves to address this – through not freezing pay, and giving higher awards than last year – there is still little sign that employees will start receiving more than 2% at their annual pay review.’

In XpertHR's latest quarterly analysis, details of 260 pay awards effective in the three months to the end of May 2017 that 'provide an identifiable increase in the lowest adult rate of pay' have been recorded. For more information please visit: www.xperthr.co.uk