The latest data from XpertHR shows that the median basic pay award in the three months to the end of January 2023 was 6%, a one percentage point increase on the previous rolling quarter.
Rising to 6%, median basic pay increases now stand at their highest level since September 1991. Despite this, wages continue to be outstripped by inflation, which increased by 10.1% in the 12 months to January 2023 (CPI measure).
XpertHR forecasts the Consumer Price Index will peak at 10.1% this quarter and ease back to 4.3% in the fourth quarter of 2023. In the meantime, while the gap between pay settlements and inflation remains substantial, employers may consider other arrangements to support staff through the cost-of-living crisis such as off-cycle one-off payments.
Latest pay award findings:
Based on the outcome of 110 basic pay awards with effective dates between 1 November 2022 and 31 January 2023 covering more than 240,000 employees, XpertHR also finds:
- Matched sample reveals four-fifths of deals higher. Latest analysis shows that 81.1% of wage settlements are pitched at a higher level in the three months to the end of January 2023 than the same employee group received a year earlier.
- Wide range of deals. Pay settlements range in value between 2% and 10.9% and there is a total absence of pay freezes.
- Interquartile range narrows. The interquartile range, which encompasses the middle 50% of basic pay reviews, is covered by 2.5 percentage points between 4.5% and 7%, compared with a 4.8 percentage point spread last month.
Sheila Attwood, XpertHR senior content manager, data and HR insights, said: “This latest dataset is significant because it includes the first wage reviews of the calendar year, giving those responsible for determining pay awards later in the current bargaining round – including April, the most important month in the annual settlement calendar – an indication of where deals are heading.
“For many employers the most important determinant of wage setting outcomes is simply their ability to pay. Of course, businesses will want to keep pace with inflation and give staff all the financial support they can, but a lot simply cannot afford an increase of that magnitude. There is no denying tensions between employers and their employees are high at the moment, with industrial action across various sectors dominating the headlines – and dispute over pay is a key factor. Where employers cannot afford higher salary increases, to support staff through the cost-of-living crisis they may consider other arrangements, for example a no-interest loan or a one-off lump-sum payment.”