Pay awards dip to lowest level since last summer

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Pay rises have fallen to their lowest level since summer 2020, according to data analysis from XpertHR. 

According to its latest provisional analysis, in the three months to the end of January 2021 the median basic pay award was worth just 1%. This compares with a median 2% in the rolling quarter to the end of December 2020.

This marks the lowest figure recorded since the three months to the end of August 2020 (when a pay freeze was recorded as the median award). Pay freezes remain commonplace, accounting for one-third of the pay settlements in the current sample.

January is a popular month for organisations to set pay, and accounts for just under a quarter of pay settlements recorded each year with XpertHR. As Covid-19 vaccines roll out and restrictions ease, this may change the outlook on pay awards for the rest of the year.

Based on a sample of 100 pay awards for the three months to the end of January 2021, XpertHR also found there was a wide interquartile range, with the bottom quarter of deals standing at nil and the upper quartile at 2%.

Almost eight out of 10 pay awards were lower than those received last year, 18.1% were at the same level and just 2.4% higher. Pay freezes were the most common strategy, representing a third of all pay awards. Where a rise was given, the most common award was 1%.

All of the pay awards recorded by XpertHR in the three months to the end of January 2021 were in the private sector, so the 1% headline figure is representative of the level of private-sector awards over this period. This is half of the 2% median recorded in the three months to the end of December 2020 in the private sector.

XpertHR pay and benefits editor Sheila Attwood said: “The fall in the headline rate of pay awards at the beginning of 2021 reflects the continuing uncertainty in which businesses are operating. The number of organisations choosing to freeze pay rather than make any increase is discouraging, but for many this decision would not have been taken lightly on the back of the effort many employees have put in over the past year.”

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