The first wage settlements of 2024 have seen median pay awards fall to 5.1% as the UK fell into recession.
According to analysis by XpertHR, in the three months to the end of January 2024, the whole economy median pay settlement was 0.9% percentage points from the previous rolling quarter. About half (53.5%) of the pay awards in a matched sample analysis were worth less than the previous year’s settlement.
The decline in inflation, which stood at 10% in January last year compared with 4% this year, was seen as a key driver in the fall in pay awards, according to the analysis, with about half of pay awards in a matched sample analysis worth less than the previous year’s settlement.
Despite the fall, pay awards overall had not been as consistently high as this since 1991, said Sheila Attwood, XpertHR senior content manager, data and HR insights. She said: “High awards were provided to account for the rising cost of living affecting UK employees at the end of 2022 and throughout 2023.
“While the median has fallen, it is still elevated by historical standards, with pay awards having not been consistently at this level since 1991. And there are still some inflation-busting deals being made – one-fifth of reviews were worth at least 7%.
Inflation and pay data
Signs that pay awards are falling in January
Pay growth continues to outpace inflation
Attwood warned: “The financial pressure from high inflation levels and elevated pay awards budgets in 2023 may mean that organisations will be limiting their budgets in 2024 in response.”
XpertHR’s latest rolling quarter findings also found that one-quarter of basic pay deals were worth 4% or less. The lower quartile has fallen from previous months, down to 4%. The upper quartile is 6.6%, indicating that there is still a fair amount of variability in the pay awards being given as employers across various industries will see pay awards influenced by their sector and last year’s pay decisions.
The analysis saw that public-sector awards remained above private-sector ones with the public-sector median award being 7%, one percentage point higher than the private-sector median.
Overall, about half (53.5%) of pay awards in a matched sample analysis were worth less than the previous year’s settlement. For these settlements, the median pay award was 4.8% for the current rolling quarter. Around one-third (33%) of settlements were higher than the previous year’s award, and 14% were the same.
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