Employers are awarding across-the-board pay increases of just 2% to their staff, according to data (released last Friday) by pay analysts at XpertHR.
The survey of more than 1,000 settlements (XpertHR’s largest sample of pay awards ever) shows that pay awards have now been at the same level for the best part of three years. And rarely is one pay increase so popular – 28% of pay awards over the past year are worth exactly 2%.
Data for the 12 months to the end of August 2015 shows that there are winners and losers among the sample. In the private sector the figure recorded is also 2%, whereas in the public sector it falls to 1.6% – and this latter figure has been boosted by a number of pay awards where a higher amount was paid to the lowest earners. A quarter (26%) of pay awards in the public sector were worth just 1%.
Although the 2% whole economy median pay award compares favourably with inflation (against both RPI inflation at 1.1% in August 2015 and CPI at nil), the research shows that for a third consecutive year employers have not increased the amount by which they enhance employees’ pay.
One piece of good news from the research is that the proportion of pay settlements resulting in a freeze has fallen, and now stands at 7.6% – not far off the long-run average of around 5% of pay deals in any one year.
Other key findings from XpertHR’s analysis of pay awards effective in the 12 months to the end of August 2015 include the following:
• Deals settle close to the median – the middle half of pay awards are worth between 1.5% and 2.5%.
• Few high pay deals – just 6.5% of settlements paid increases of more than 3%, and several of these were as a result of weighting towards the lowest paid.
• Lower pay awards for many – four pay awards in 10 (38.9%) were lower than the same group of employees received at their previous review, with just three in 10 (29.5%) higher.
• Sectors converge – the median pay award in both the manufacturing-and-production sector, and services, sits at 2%.
XpertHR’s rolling quarterly data also shows a median 2% pay award in the three months to the end of August 2015.
XpertHR Pay and Benefits editor Sheila Attwood said:
“Our data clearly shows that employers are awarding the same across-the-board pay rises as a year ago, and the year before that. Although the economy is now growing, employers are not responding by awarding higher pay increases to employees.”
Note to editors
• Press inquiries to Sheila Attwood, email@example.com, tel 0208 652 2251
• XpertHR has collected details of 1,197 basic pay awards effective in the 12 months to the end of August 2015 that provide an identifiable increase in the lowest adult rate of pay. These cover the pay awards of more than 6.3 million employees. A further 365 pay awards based on a measure of employee performance have also been recorded by XpertHR over the analysis period.
• All XpertHR press releases can be viewed here. The next press release on pay settlement trends will be released on 23 October 2015, when we will reveal the results of our survey of pay rise forecasts for 2016.
• XpertHR is the UK’s most comprehensive online source of legal compliance, good practice and benchmarking information made available to HR professionals as a single subscription service.
The median increase by number of pay reviews is the midpoint in the total spread of basic pay awards – i.e. the percentage at which half the pay reviews are at the same or higher value and half are at the same or lower value.
The basic pay award measured is the annualised percentage increase received by the lowest adult grade. It excludes any additional payments over and above the basic rise such as bonuses, consolidation, increments and performance-related pay.
XpertHR offers detailed statistics and analysis of pay settlements across the UK. The research is based on the largest sample of pay deals collected in the UK – XpertHR collects details of pay settlements for around 1,600 employee groups each year. Its database contains more than 38,000 pay settlements dating back to 1984.