But a preliminary examination of the first pay awards concluded for April 2016 reveals a bleaker outlook. April is the single most important month of the year for pay settlements, with around four in 10 taking effect in this month alone.
Based on a sample of 91 basic pay awards effective in April 2016, the median pay settlement for this month is worth just 1.5%. The lower April deals have also pulled down the figure for the three months to the end of April, with provisional data showing that the rolling quarterly median basic pay award has fallen to 1.7%.
These whole-economy figures contain pay awards across both the public and private sectors. XpertHR's sample of data for the first three months of the year does not contain any public sector awards, as the first of these tend to take effect in April. Yet excluding these deals and examining the private sector in isolation does little to change the direction of the April figures – the median private sector basic pay award in April 2016 currently stands at 1.7%. Public sector pay awards so far in 2016 continue to be centred on the 1% figure set out in Government policy.
The data also shows that around half of all pay awards are worth less than the same group of employees received last year. In a matched sample of April 2016 pay awards, almost half (45.7%) were less than the same employees were paid last year, while just 22.9% were higher. Similar numbers were recorded for the first three months of the year (51.8% lower; 17% higher).
There is little in the data to suggest what might be causing the fall in the level of pay awards. For example, a couple of the lower pay awards are the result of a link to RPI inflation at the end of 2015, when it stood at just over 1%. In contrast, a couple of the higher pay awards for April 2016 are linked to the introduction of the national living wage, which at £7.20 an hour from 1 April represented a 7.5% increase on the national minimum wage rate. There is some evidence that employers are reducing the pay awards for other staff to accommodate the increases for those eligible for the national living wage. For example, a charity in our sample made a 2.8% increase to around one-third of its staff in order to comply with the national living wage, with a 2% award for the remaining employees. A care provider froze pay for all employees except those entitled to the national living wage.
XpertHR pay and benefits editor Sheila Attwood said:
"The first look at pay settlements for April 2016 reveals the extent to which employers are struggling with making higher pay awards. The data provides early evidence that pay settlements might be heading downwards from what is already a relatively subdued figure of 2%. While many employees will have benefitted from the 1 April introduction of the national living wage, it is possible that many others will struggle to secure even a 2% pay increase this year.