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Stuart Gentle Publisher at Onrec

Pay awards remain at 6% as high inflation persists, finds XpertHR

XpertHR’s research finds that the most common outcome of a pay review is 5% with approximately one in six settlements (16.7%) resulting in a basic pay increase of this level.

  • In the three months to the end of March 2023, the median basic pay rise was 6%, unchanged from the previous two rolling quarters.
  • The most common basic pay award was 5%, given in around one in six awards recorded.

The latest data from XpertHR shows that more than three quarters (78.4%) of pay settlements are higher compared to the same period a year ago. The median increase in pay for March 2023 is 6%, 12 months ago this figure stood at 3.7%.

XpertHR’s research finds that the most common outcome of a pay review is 5% with approximately one in six settlements (16.7%) resulting in a basic pay increase of this level.

The latest data from XpertHR indicates the unchanged trend from the previous two rolling quarters with median basic pay rises remaining at 6% in March 2023. With UK inflation falling slightly to 10.1%, a slower rate than recorded in the previous month, real wages continue to fall as living costs erode gains in pay.

While the median settlement continues to reach record figures, amongst the manufacturing and productions sectors there are some clear disparities. The construction industry is lagging behind at a 2.5% increase compared to utilities (electricity, gas and water) at 6.6% - a contributing factor is the long-term deals signed within the sector that were negotiated before the recent spike in inflation.

Latest rolling quarter findings:

XpertHR’s newest data examines the outcomes of 272 pay awards across the public and private sectors. The dataset is effective between 1 January and 31 March 2023, and covers over half a million employees. The data also highlighted:

  • Interquartile range narrowed compared to previous rolling quarter. The middle 50% of pay reviews, known as the interquartile range, has tapered to 3.2 percentage points, compared to 3.4 percentage points last month. The lower quartile stands at 4.8% and the upper quartile at 8%.
  • Settlements higher than last year. In March 2022, the median increase in pay was at 3.7%; the median now stands at 6%.
  • Pay freezes remain low. Amongst those surveyed, only 1.5% responded that their pay had been frozen, a decrease from 2% in the previous month.

Sheila Attwood, XpertHR senior content manager, data and HR insights, said: “Although pay rises continue to reach record levels, UK employees will still feel the financial squeeze as inflation remains above expectations. With food and drink prices remaining stubbornly high, real term wages are set to shrink and employers can expect workers to maintain their push for raises to shield themselves from rising living costs.

“April is the most important month in the annual pay settlement calendar and tensions between employers and employees will be heightened, particularly in the public sector. Of course, inflation is expected to fall throughout the year, however, employers must maintain an open dialogue with their employees to factor in recent developments. Lack of transparency and a negative workplace culture will only compound issues further.”