Pay rises have slumped to their lowest level since June 2010, according to data released today from pay specialists XpertHR.
The median basic pay increase (which excludes performance-related pay, bonuses and progression payments) in the three months to the end of October 2012 was just 1.8%, the survey finds.
With retail prices index (RPI) inflation jumping to 3.2% over the same period, pay awards are now trailing the increase in prices by 1.4 percentage points, the first increase in the gap since April 2012. RPI continues to be the inflation measure that the majority of pay setters use to benchmark their pay award, previous XpertHR research has found.
The findings are based on a sample of 87 pay awards across the public and private sectors. Looking at the private sector in isolation, the median pay increase over the past three months is higher – at 2% – but remains subdued by historic standards.
However, pay awards over the next year as a whole are expected to be slightly higher. An XpertHR survey of private sector employer pay forecasts reveals that they are predicting a 2.5% median pay increase (over the year to the end of August 2013). Manufacturing and production firms are forecasting a higher increase – 3% – than companies in the services sector – at 2.4%. At these levels, manufacturing-and-production employees might just receive a pay increase that is higher than inflation, while those working in private-sector-services companies will see their pay increase fall short of the increase in prices. Pay awards have not been higher than inflation since the end of 2009.
XpertHR Pay and Benefits editor Sheila Attwood said:
"Respondents to our survey reported that 'controlling paybill costs' will be a top priority over the next year, and our latest figures on pay settlements reflect this in practice. The dip in the level of pay settlements comes as some companies continue to freeze pay, while those at the top end of the range also remain cautious in their increases – just 8% of pay awards in our latest sample are worth more than 3%, compared with 58% over the same period in 2008, just before the start of the recession.
"We see continued caution in pay setting over the coming year, with 2.5% the expected benchmark pay award."
