This marks an increase on the 2% median award recorded in every rolling quarter during 2017, and is the highest figure seen since the three months to the end of March 2014 (when pay awards were also at a median 2.5%). XpertHR’s headline measure of pay awards has not been higher than 2.5% since the three months to the end of December 2008.
Just over half (53.5%) of pay awards provided higher increases than the same employees received the year before, with just 16.8% receiving a lower settlement. Although the median pay award has risen, 2% remains the most common pay rise, accounting for 22.4% of awards (15.3% received 2.5%).
The current sample is exclusively made up of pay awards in the private sector – pay bargaining in the public sector will start again in April, when the majority of deals in the sector will settle.
The figures reflect the Bank of England’s assertion that wage growth will pick up during 2018. What is less clear, however, is whether pay awards will exceed inflation this year. Based on a comparison of XpertHR pay data and retail prices index (RPI) inflation, prices have been rising faster than pay since September 2016. RPI is expected to average 3.7% over the first half of this year, suggesting we will continue to see wage growth fall behind inflation over the coming months.
XpertHR pay and benefits editor Sheila Attwood said:
“Early 2018 has seen a clear boost to pay awards from employers across both the manufacturing and services arms of the private sector. The 2.5% headline pay award is the highest recorded by XpertHR since March 2014.”