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Dip in pay settlement levels

Preliminary analysis reveals that pay awards in the three months to the end of April 2016 were worth just 1.7% at the median, according to pay analysts XpertHR. This marks the first time in two years that the median pay award has shifted from 2%, and is the lowest level since the three months to the end of October 2012.

April is the busiest month of the year for pay settlements, with around four in 10 effective in this month alone. To date, we have recorded around one-third of the total number of April pay settlements that we would expect to collect each year.

Based on 184 basic pay awards effective between 1 February and 30 April 2016, we find that:

  • The median pay award has fallen to 1.7%, from 2% in the previous rolling quarter.
  • The middle half of all pay awards (denoting the interquartile range) are worth between 1% and 2.1%.
  • Almost half (45.3%) of pay awards are lower than the same group of employees received last year. Only a fifth (22.7%) are higher, with the remaining 32% at the same level as last year.

The disparity between pay awards in the public and private sector continues, with a host of public sector pay awards effective in April 2016 worth just 1%. Private sector pay awards are recorded at a median 2% over the three-month analysis period.

Employers have predicted that pay awards would be worth 2% over the course of 2016. Although we are currently short of this figure, pressure from an increase in inflation, and the national living wage, could see pay awards return to the 2% "norm" over the coming months.

XpertHR pay and benefits editor Sheila Attwood said:

"There is a definite dip in the level of pay awards across the economy, although low public sector pay awards are partly to blame. In the private sector, the impact of the national living wage is still in its early stages, and employers remain cautious about the level of pay increases being given to employees."