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Pay awards dip in second quarter of the year

Provisional findings from pay analysts XpertHR show that pay awards in the three months to the end of June 2016 were worth 1.8% at the median. This is the third successive rolling quarter in which settlements have stood at this level.

Although this marks the end of a two-year period of stability during which 2% had become the norm for pay awards across the whole economy, many organisations are still pitching awards at this level – 2% is the most common basic award in the current sample, accounting for almost a quarter of basic deals.

Based on a sample of 325 basic pay awards effective between 1 April and 30 June 2016, we find that:

  • The median pay award across the whole economy is 1.8%, with the middle half of pay awards (the interquartile range) worth between 1% and 2%.
  • Close to half (45.2%) of pay awards are lower than the award received by the same group of employees last year. Around a quarter (23.6%) are higher, with the remaining 31.2% at the same level.
  • When the private sector is considered in isolation, we find that the median pay award remains at 2%. This figure is the same across both arms of the private sector, with pay awards in both manufacturing-and-production organisations and in private-sector services worth 2%.

We have also analysed pay settlements effective in the first half of the year (1 January to 30 June 2016), and find that across the whole economy pay awards have been worth 2% at the median. There are no industry sectors in which the median settlement is higher than 2%. The lowest settlements are found in the public sector and not-for-profit organisations, where pay awards have been worth just 1%.

XpertHR pay and benefits editor Sheila Attwood said:

"Although there has been a dip in whole-economy pay awards over the past three rolling quarters, in the private sector pay settlements are still worth 2% at the median, in line with the forecasts made by employers at the start of the year. It remains to be seen how the uncertainty around the impact of the Brexit vote will feed through to pay settlements, but we are likely to see pay awards remaining subdued for many months to come."