Talk of strong wage growth might be premature, with private-sector employers planning across-the-board pay increases to staff of just 2% in 2015, according to the latest data from pay analysts at XpertHR.
Although almost eight organisations in 10 are planning a general pay increase for staff over the next year, the level of the increases expected does mute some of the optimism.
However, while the across-the-board pay rises are likely to remain low, this is not to say that employees won't see other increases in their pay. It is clear that employers still do not have the ability to pay higher increases to everyone; instead, the recruitment and retention issues that many organisations are experiencing are being addressed with one-off increases to pay being made in particular hot spots.
The survey of private-sector employers also found that around two-thirds of organisations are still likely to take some steps to control their paybill costs over the coming year. Measures likely to be employed include: not replacing leavers; reducing overtime or overtime payments; lower pay rises; and redundancies.
XpertHR's bi-annual survey of pay forecasts is based on responses from 266 private-sector organisations. Public sector organisations were excluded from the research as many are covered by the Government policy that restricts 2015/16 pay awards to up to an average of 1%.
Latest pay awards
The latest pay settlement readings from XpertHR confirm the subdued nature of pay bargaining at present. In the three months to the end of February 2015, the median pay award across the economy was worth just 2% - half a percentage point below the 2.5% recorded in the three months to the end of February 2014.
Other key findings from XpertHR's latest analysis of pay awards include:
- The middle half of pay awards effective in the three months to 28 February 2015 are worth between 1.6% and 2.5%.
- The most common pay award was a 2% increase (awarded in 26.3% of cases).
- Within the private sector, manufacturing-and-production companies' pay awards are worth a median 2.1% in the latest analysis. Private-sector services companies continue to make pay awards typically worth 2%.
- Pay freezes account for around 10% of all pay awards.
- Pay awards in the public sector were worth a median 1.5% in the 12 months to the end of February 2015, compared with 2% in the private sector over the same period.
XpertHR Pay and Benefits editor Sheila Attwood said:
"A 2% pay rise over the coming year will be less than many employees had hoped for. Despite improving economic conditions, employers are sticking to their guns on low pay awards, which are only made to look more appealing by the fall in inflation."