Annual pay reviews are still yielding low pay increases for staff, according to the latest data released last Friday by pay analysts at XpertHR.
In the three months to the end of June 2015, the median pay award was worth just 2%. This is unchanged since the three months to the end of April 2014. However, it is in line with the predictions made by employers at the beginning of the year – the 266 private-sector organisations questioned by XpertHR at that time predicted a 2% pay award this year.
While pay freezes are far less common than during the recession – now accounting for just 6.9% of all pay awards in the current period – employers are sticking firmly to only modest increases for employees. Employers are also not straying far from the norm, with pay awards closely bunched around the median value. Half of all pay awards are worth between 1.5% and 2.5%. Just one pay award in six (16%) is worth 3% or more.
By sector, the median pay award in both the manufacturing-and-production, and private-sector-services arms of the private sector are recorded at 2%. In the public sector, pay awards in the 12 months to the end of June 2015 lag the whole economy figure by half a percentage point, standing at just 1.5%.
The busiest part of the year for pay bargaining is now behind us – more than three-quarters (76.7%) of pay reviews take place in the first six months of the calendar year. However, a number of employers will conduct a pay review in the autumn to coincide with the increase in the national minimum wage. This year, the minimum wage increases by 3.1% from 1 October, and we could see an influx of deals at this level. Employers will also need to start planning for the introduction of the new national living wage from April 2016, when employees aged 25 and over will be entitled to £7.20 an hour.
XpertHR Pay and Benefits editor Sheila Attwood said:
“The going rate for pay awards across the economy is firmly stuck at 2%. However, with the Chancellor announcing that pay awards in the public sector will be restricted to 1% for a further four years from 2016-17, the divide between the value of increases in the public and private sectors is likely to prevail for many years to come.
- In the latest quarterly analysis, details of 319 pay awards effective in the three months to the end of June 2015 that provide an identifiable increase in the lowest adult rate of pay have been recorded. These cover the pay awards of almost 2.5 million employees.
- All XpertHR press releases can be viewed here. The next press release on pay settlement trends will be released on 21 August 2015.
- 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 37,000 pay settlements dating back to 1984.
Senior HR Practice Editorial Team Leader
Pay and Benefits Editor
Tel: 020 8652 2251