Pay award levels increase to 2.8% in autumn months

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The average pay rise awarded to employees increased slightly in the three months to the end of October, according to analysis by XpertHR.

The median basic pay award edged up to 2.8% at the end of the quarter, 0.3 percentage points higher than the average seen in every other rolling quarter in 2019.

However, XpertHR warned that the increase should be viewed with caution as its analysis looked at pay settlements awarded between 1 August and 31 October, traditionally a period where few pay reviews are concluded, so its sample size (43) was relatively small compared with previous months’.

Employers are in the dark about the rates they would need to pay their employees on the national minimum wage and national living wage from April 2020, as the general election has delayed the national minimum wage announcement usually scheduled for this time of year.

The Low Pay Commission’s latest estimate, from May this year, suggested that the national living wage will rise from £8.21 to £8.67 per hour.

XpertHR pay and benefits editor Sheila Attwood said: “Despite a small rise in pay award levels in the latest quarter, the underlying picture is of organisations increasing pay by 2.5% across 2019 as a whole.

“While for some organisations the delay in the 2020 national minimum wage announcement will create some planning headaches, we expect many employers to continue to centre their next pay award on a 2.5% benchmark.”

The sample of pay deals analysed covered around one million employees. XpertHR found that:

  • The middle half of pay awards were worth between 2% and 3.4% – a handful of higher-level pay settlements have inflated the median;
  • Almost half (46.2%) of pay awards were higher than the same group of employees received the previous year, while 38.5% were lower and 15.4% were at the same level;
  • In the 12 months to the end of October, the median pay award in both the private and public sectors was 2.5%; and
  • The median pay settlement in the services sector, which dominated the sample, was 2.8%.

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