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2017 ends with pay awards at 2%

Employers have been awarding a median 2% pay award throughout 2017, analysis by pay experts at XpertHR reveals.

Despite unemployment falling and inflation rising through the year, employers have refused to budge from the muted pay increases they have favoured for a large part of the past five years. In the latest period, XpertHR has recorded pay awards across the economy at 2% in every rolling quarter since the three months to the end of December 2017.

XpertHR’s pay forecasts survey has found that private sector employers will continue to award pay rises at a 2% median through 2018. Half of all pay awards next year are forecast to be worth between 1.8% and 3%, although 2% is by far the most common pay award expected, accounting for 32.4% of predictions. And while employers expect to feel some pressure on next year’s pay awards from the pay rates offered by their competitors, many are concerned that pensions costs will impact negatively on the budgets they have available to reward their staff.

Latest pay award findings

Based on a sample of 42 basic pay awards effective between 1 September and 30 November 2017, we find that:

  • The median pay award across the whole economy is 2%, with the middle half of pay awards (the interquartile range) worth between 1% and 2.5%.
  • While only a tenth (11.8%) of pay awards were lower than the award received by the same group of employees last year, the majority (61.8%) were the same. One-quarter (26.5%) of awards were higher than the employee’s previous increase.
  • Within the private sector, the 2% figure is recorded for pay awards in both manufacturing-and-production organisations and in private-sector services firms.

Over the 12 months to the end of November 2017, the median pay award in the private sector is 2%, compared with 1% in the public sector.

XpertHR pay and benefits editor Sheila Attwood said:

“Employers have kept a lid on their pay settlements for the past year, and all indications are that this will continue in 2018 too. Employees who are in skills shortages areas might be able to secure higher increases, but for the majority employers are looking to stick to the 2% figure.”