Median pay awards at 2.5% for fourth consecutive quarter

The median basic pay award remained at 2.5% for the fourth consecutive rolling quarter at the end of April, analysis by XpertHR has found.

Almost two-thirds (62.9%) of pay deals were higher than the award the same employees received in their previous pay review, its examination of 168 basic pay awards showed. Only 13.8% of pay settlements were lower, while 23.3% remained the same.

Pay awards in manufacturing and production increased to 2.9% in the latest rolling quarter – their highest since April 2012.

The median pay award in the private sector was 2.5% over the 12 months to the end of April 2018, compared with 1.1% for public sector staff.

Across the economy as a whole, the middle half of all pay deals were worth between 2% and 3%.

XpertHR published its findings as UK inflation fell to a 13-month low. The consumer price index – the headline measure of inflation – rose by just 2.4% in April, compared with 2.5% in March. The retail price index, however, rose to 3.4% from 3.3% in March.

“Our figures this month confirm the upturn in pay settlement levels in 2018. Recruitment and retention pressures, and therefore salaries in competitor organisations, are helping to drive up settlement levels,” said Sheila Attwood, XpertHR pay and benefits editor.

April – traditionally the busiest bargaining month of the year – usually sees around 40% of pay settlements in any one year take effect. This increases to more than 60% of deals in the public sector.

However, pay bargaining in the public sector is slow to start this year as the pay review bodies have not been published and civil service pay guidance, which is usually issued in March or April, has not yet surfaced.

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XpertHR expected that the relaxation of the public sector pay cap, which on average has seen public sector staff receive an average of 1% for the past five years, might result in some higher deals. It said some of the lowest paid public sector employees have seen a 9.2% increase from April.

In March, XpertHR predicted that pay awards in 2018 would be at their highest for almost four years, with employers planning on increasing pay by an average of 2.5% over the coming months.