Pay awards across the economy in the three months to the end of December 2016 stood at 1.9%, with half worth between 1% and 2.1%. Most deals gave employees an increase worth the same or less than at their previous review, with just one in six getting a higher increase than last time around.
Since September 2016, XpertHR’s headline measure of pay awards has fallen below the level of retail prices index (RPI) inflation (following almost two years of real-terms growth in wages). The gap between pay awards and RPI continues with this latest release of data. The median pay award now sits 0.6 percentage points below the 2.5% RPI for December 2016.
A year in review
2016 as a whole was subdued in terms of pay awards. Across the private sector, the median award was worth 2%, while the 1% in the public sector was in line with government policy. Around one quarter of all pay awards were at exactly 2%, demonstrating just why our median has struggled to move from this level.
Pay freezes were still evident, while the highest pay increases were often linked to the introduction of the national living wage in April 2016.
XpertHR recorded the highest median pay award in the construction sector, at 2.5%. In contrast, the lowest was among not-for-profit organisations (1%).
The year ahead
Previous research from XpertHR showed that employers in the private sector are forecasting a median 2% pay award in the year to 31 August 2017.
To date XpertHR has collected details of 96 basic pay settlements effective in January 2017. Provisional analysis of these settlements finds that the median award stands at 2%. Half of all awards are worth between 1% and 2%, showing a bunching of pay awards at the lower end. In addition, exactly half of these pay awards delivered a lower increase than employees received in January 2016.
XpertHR pay and benefits editor Sheila Attwood said:
“The first pay awards to settle in 2017 are set at a similar level to that seen over most of the past year. While inflation is beginning to rise, this has yet to feed into pay award levels. But there is no doubt that as the year progresses employers will be feeling the pressure from employees to provide a real-terms pay increase.”
