Median pay awards rose to 2.2% in the quarter to the end of November, according to analysis from XpertHR.
This is up from 2.0% in the previous rolling quarter, and the highest level of median pay award since June 2020.
XpertHR’s latest analysis comes as inflation reached a 5.1% high, putting pressure on employers to increase salaries in a candidate-driven market.
More than half (56%) of pay awards across XpertHR’s sample of more than 650,000 employees were higher than those workers received the previous year.
Almost a third (32%) were lower, and 12% stayed the same as last year, the analysis found.
The lower quartile (or bottom quarter of pay awards) was at 1.5%, while the upper quartile was at 3.0%. This compares to a range between nil and 2.4% for the same period last year.
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Only three pay settlements in the sample resulted in a pay freeze, equivalent to 7.1% of organisations surveyed. A year ago, 26.3% of companies instituted a pay freeze.
Public sector pay awards remained behind the private sector. In the 12 months to the end of November 2021, the median basic pay increase for the public sector was just 1.4%, compared with 1.8% in the private sector. A year ago the figures were 2.5% and 2% respectively.
Sheila Attwood, XpertHR pay and benefits editor, said the 0.2 percentage point rise on the last quarter is “the first sign of the pay pressure that we expect to see in the months ahead”.
“High inflation rates pushing up the cost of living and labour shortages are putting pressure on employers to increase wages to attract and retain workers.
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“Despite this, it is encouraging to see pay freezes become less common and we expect to see this continue as we head into 2022. Our most recent survey predicted that pay awards would reach 2.5% in 2022, and it looks like we are now on the way to hitting that figure,” she added.
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