Date: 23 June 2016

XpertHR reports pay awards edge back up

Provisional analysis of pay settlements effective in the three months to the end of May 2016 reveals that the median award has risen to 2%, according to pay analysts XpertHR. Last month, we reported that the headline award had fallen below this level for the first time since the end of 2012. Although the current findings mark a return to the 2% benchmark, the median is finely balanced, and would have been worth less than 2% with the addition of a single settlement below this level.

Much of the weakness in the pay awards over the past few months is a result of the low pay settlements in the public sector, where the pay bargaining year is kick-started with the recommendations of the independent pay review bodies. Their reports cover many key public-sector workforces with April review dates – including NHS staff across the UK who saw their pay awards restricted to 1% by Government policy. In the private sector, the median award has been worth 2% for almost two years.

However, overall only a minority of pay settlements from across the whole economy are higher than those made to the same group in the previous bargaining round – in a matched sample fewer than a quarter (23.2%) are higher than the group received last year, compared with more than four in 10 (43.2%) that are lower and one-third (33.6%) that are the same.
Based on the 270 basic pay awards effective between 1 March and 31 May 2016, XpertHR’s analysis reveals that:

• The median pay award stands at 2%, up from the revised figure of 1.8% in the previous rolling quarter.
• 2% remains the most common award, making up almost a quarter of basic settlements, with one deal in six worth 1%.
• Pay settlements in the two arms of the private sector – manufacturing and production, and private-sector services, are worth 2%, in line with the whole-economy figure.

Looking at pay awards over the year so far, companies in the utilities sector (electricity, gas and water) have awarded increases worth just 1.5% at the median, the weakest in the manufacturing-and-production sector, while the not-for-profit sector has shown the lowest increase among private-sector services groups, at just 1%.

XpertHR pay and benefits editor Sheila Attwood said:
“There is uncertainty about the direction of pay settlements, at least in the short term, but for the time being we are seeing employers in the private sector making awards in line with their prediction of 2% over the course of the year, while the public sector continues to feel the impact of the Government’s policy of restraint.”

 

Note to editors

  • Press inquiries to Rachel Sharp, rachel.sharp@xperthr.co.uk, tel 0208 652 2271.
  • In the latest quarterly analysis, details of 270 pay awards effective in the three months to the end of May 2016 that provide an identifiable increase in the lowest adult rate of pay have been recorded.
  • All XpertHR press releases can be viewed here. The next press release on pay settlement trends will be released on 28 July 2016.
  • 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 40,000 pay settlements dating back to 1984.

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 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.

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