Gap between pay awards and inflation tightens

The gap between pay awards and inflation is at its narrowest level for four years, due to the continued fall in retail prices index (RPI) inflation, data from XpertHR shows.

While XpertHR’s pay data found that the median pay award remained at 2% during the last quarter, RPI inflation fell for the ninth consecutive month in June, to reach 2.8%.

This is the narrowest gap between pay awards and inflation since pay rises fell below RPI in December 2009 and is the closest the two figures have been since 2008, when pay settlements were 0.8 percentage points above headline inflation.

XpertHR pay and benefits editor Sheila Attwood commented: “With the busy April pay round now behind us, we can look forward to how pay settlements will shape up over the remainder of the year.

“However, with a third quarter of negative economic growth now confirmed, and the labour market remaining weak, there is no sign of any upward movement in pay settlement levels over the coming months.”

The survey also found that the most common pay rise in the three months to the end of June was 2%, awarded in 18.3% of basic pay settlements, followed by a 3% pay rise, accounting for 17.9% of pay awards.

View the full findings of the July pay trends report, including figures for manufacturing and production, private-sector services and the public sector on XpertHR.

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