In the three months to the end of October 2016, the median basic pay award stood at just 1.5% This represents a 0.2 percentage point drop from the figure in the previous rolling quarter (1.7% in the three months to the end of September 2016) and is the lowest quarterly reading since June 2010.
By sector, pay awards in the private sector are slightly higher than the whole-economy norm, at 1.8%. Public sector awards continue to cluster at 1%.
Minimum wage rates
In October 2016, the national minimum wage rose by 3.7% to £6.95 an hour (for workers aged 21 to 24), compared with basic pay rising by 1.5% in the three months to the end of October.
The fact that the 3.7% figure is not reflected in XpertHR's data is probably due to the introduction of the national living wage - at £7.20 an hour - in April this year. Although employers are obliged to pay this rate to workers aged 25 and over, many extended it to all their adult employees. Therefore, when the national minimum wage was increased in October, no further action was needed.
In his Autumn Statement, Chancellor Philip Hammond confirmed the new minimum wage rates from April 2017. The national living wage (for workers aged 25 and over) will rise to £7.50 an hour; the national minimum wage (for 21-24 year olds) will move up to £7.05 an hour. The increase in the national living wage is worth 4.2% - comfortably above the current going rate for pay awards, and XpertHR’s forecast of pay awards at 2% during 2017. The national minimum wage increase is worth just 1.4%, but coming after the 3.7% increase in October 2016 also gives affected workers an annual increase greater than most other employees.
Latest pay award findings
Based on a sample of 78 basic pay awards effective between 1 August and 30 October 2016, we find that:
- The median pay award across the whole economy is 1.5%, with the middle half of pay awards (the interquartile range) worth between 1% and 2%.
- The majority (41.7%) of pay awards are lower than the award received by the same group of employees last year. A quarter (25%) are higher, with the remaining 33.3% at the same level.
- Within the private sector, the 2% figure is recorded for pay awards in private-sector services, but falls to 1% among manufacturing and production employers (albeit based on a small sample at this time of year).
Over the 12 months to the end of October 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 current fall in pay award levels is expected to be a temporary blip, with 2% set to be the benchmark award over the next year. However, employees on the national living wage or national minimum wage rates will receive annual increases well in excess of this figure.”
