While the number of organisations settling their pay award at this time of year is lower than in the busy first half of the year, many employers are starting to watch pay trends closely in order to prepare for pay deals taking effect in the autumn and the early months of 2017. Reward professionals also need to implement the 1 October rises to the national minimum wage, and plan ahead for further increases – including to the national living wage – from April 2017.
Our findings this month confirm two clear patterns that we have noted throughout this year. First, the majority of employees are receiving lower pay awards this year than at their previous review – our matched sample analysis reveals that this is the case for more than half of employee groups. Second, there is a fairly wide spread of pay awards around the median. Our sample continues to contain a reasonable number of pay freezes (one in seven of the pay awards examined in the current period) but also pay rises worth 3% or more (15.6%).
Based on a sample of 90 basic pay awards effective between 1 June and 31 August 2016, we find that:
- The median pay award across the whole economy is 2%, with the middle half of pay awards (the interquartile range) worth between 1% and 2.3%.
- More than half (50.8%) of pay awards are lower than the award received by the same group of employees last year. Around a fifth (20.6%) are higher, with the remaining 28.6% at the same level.
- Within the private sector, the 2% figure is recorded for pay awards in both manufacturing-and-production organisations and in private-sector services.
Over the 12 months to the end of August 2016, the median pay award in the private sector is 2%, compared with 1% in the public sector.
XpertHR pay and benefits editor Sheila Attwood said:
"The overall level of pay awards stands at 2%, but there is a fairly wide spread of awards either side of this figure. Private sector employees continue to fare better than their public-sector counterparts – a situation that is expected to prevail for at least the remainder of the Government’s period of pay restraint.”
