Stuart Gentle Publisher at Onrec

One-third of organisations freeze pay

Pay rises have fallen to their lowest level since summer 2020, according to the latest research from pay analysts XpertHR.

According to XpertHR’s latest provisional analysis, in the three months to the end of January 2021 the median basic pay award is worth 1%. This compares with a median 2% in the rolling quarter to the end of December 2020. It is also the lowest figure recorded since the three months to the end of August 2020 (when a pay freeze was recorded as the median award). Pay freezes remain commonplace, accounting for one-third of the pay settlements in the current sample.

Across the whole economy, January is a key month for pay setters, accounting for just under a quarter of pay settlements recorded on the XpertHR pay databank each year. However, it is still early days in terms of 2021 pay awards and our sample will continue to grow as we collect details of pay awards from organisations as they work through the ongoing concerns stemming from the coronavirus pandemic and the time it will take for the vaccine to be fully rolled out, and the uncertainty still surrounding the impact of Brexit.

Latest pay award findings

Based on a sample of 100 pay awards for the three months to the end of January 2021, XpertHR found the following:

  • Headline pay award dips. The median basic pay award in the three months to the end of January 2021 is 1%, down from 2% in the previous rolling three-month period.
  • Wide interquartile range. The lower quartile (at or below which the bottom quarter of pay deals lies) stands at nil and the upper quartile at 2%.
  • Majority of pay awards are lower. In a matched sample analysis, 79.5% of pay awards made are lower than the same employee group received in the previous year, 18.1% are at the same level and just 2.4% are higher.
  • Pay freezes represent one-third of all pay awards. Among the total sample of pay settlements recorded, 33.6% are pay freezes.
  • Most common pay award worth 1%. Our analysis finds that the most common pay award is worth 1%, followed in second place by pay rises worth 2%.

All of the pay awards recorded by XpertHR in the three months to the end of January 2021 are in the private sector, and our 1% headline figure is therefore also representative of the level of private-sector awards over this period. This is just half the 2% recorded in the three months to the end of December 2020 in the private sector.

XpertHR pay and benefits editor Sheila Attwood said:

“The fall in the headline rate of pay awards at the beginning of 2021 reflects the continuing uncertainty in which businesses are operating. The number of organisations choosing to freeze pay rather than make any increase is discouraging, but for many this decision would not have been taken lightly on the back of the effort many employees have put in over the past year.”