Employers expect to increase pay by 2.5% in 2014

pay rise

Typical pay rises in the private sector are expected to be 2.5% next year, according new research released today.

XpertHR’s latest study on pay forecasts for the year to August 2014 reveals that employers in manufacturing, production and services expect to give a median pay award of 2.5%. Almost a quarter of employers surveyed disclosed that they forecast a 2% wage rise, while a similar proportion anticipated one of 3%.

Pay freezes that were popular during the recession continue to decline in numbers, with only 6% of settlements awarding employees no pay increase.

XpertHR pay and benefits editor Sheila Attwood said: “Private-sector employers are predicting another year of subdued pay rises, with increases forecast to be worth around 2.5%. There are some positive signs, with fewer employers predicting a pay freeze, but awards expected to be worth more than 3% remain rare.

“Employers are likely to be keeping a close eye on the rate of growth in the wider economy and in turn in their own business, and how this affects the demand for labour, before making any big decisions on pay.”

The research showed that employers will continue to take into account a number of different factors when considering the level of their next pay award. Company performance and the ability to pay tops the list of issues that employers will consider – followed by the level of inflation, pay levels at other organisations and recruitment and retention factors.

These findings were based on a survey of pay-setting intentions of 240 private-sector organisations, who supplied information in relation to 330 employee groups.

Read the full analysis of the forecasts for the coming year here.

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