Average pay awards still lie below inflation at 2%, according to data from HR and reward consultancy Paydata.
Its Spring 2021 reward management report for the UK found that while 54% of companies have managed to avoid making redundancies, they remained cautious about pay awards.
This is despite almost a fifth (22%) of employers experiencing retention difficulties, according to Paydata, and this proportion is expected to rise to 31% in the next six months.
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While there was a temporary uplift in pay awards at this point last year to 3%, this was mainly because 56% of respondents to its 2020 survey had already completed pay reviews prior to the first lockdown.
Paydata found that 11% of respondents were operating a pay freeze, although this was a 24% drop in the number of organisations freezing pay from its autumn survey.
Almost three in 10 offered a pay increase across the board, while 26% implemented a combination of across- the-board pay rises and individual increases.
Roughly the same proportion of organisations operated a bonus scheme, steady at 75-76%. Half said they would keep the number of people receiving bonuses the same this year, while a third said the size of bonuses would stay the same.
While not all organisations were able to offer pay increases, 89% have adopted strategies to boost employee wellbeing, and four-fifths used employee surveys and consultations to listen to employees’ concerns and suggestions.
Optimism in business recovery is higher than it was in autumn 2020, according to Paydata. Forty-seven percent of respondents said they were optimistic about pay increases, compared with just 18% in autumn.
Although enforcements around gender pay gap reporting were postponed because of the pandemic in 2020, 61% measured the gap in 2020 despite not being required to.
The gender pay gap among Paydata’s respondents grew very slightly between spring 2020 and 2021, up from 14.0% and 14.8%.
Looking forward, 43% are conducting further analysis into their figures, while 5% will carry out an equal pay audit (down from 9% in spring 2020).
More than three-quarters (78%) plan to analyse their ethnicity pay gap data, while 57% will look at differentials based on age, and 60% will consider how they support disabled employees.
Just under a third expect to pay a premium to attract talent, down from 63% in autumn 2019, although this may change with 35% expecting recruitment difficulties over the next six months.
Tim Kellett, Paydata director, said pay levels had “taken a hit” but that employers were seeing the “first signs of optimism” in the labour market.
“Combined with rising living costs, employers are acutely aware of the need to deliver value through reward schemes and recognise employees who have been through an extraordinary year,” he said.
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“The renewed focus on wellbeing is important not only for managing remote workforces but defining new ways of working as we emerge from the pandemic. So-called ‘hybrid working’ will look different for each organisation, with only 4% predicting a return to their previous way of working.”
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