Pay awards overtaken by inflation

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The recent jump in the retail prices index (RPI) to 3% means that pay awards are falling slightly behind inflation, according to analysis by XpertHR.

Pay awards in the three months to the end of April 2019 were worth a median of 2.5%. This was the fourth consecutive rolling quarter at this level.

This meant that pay awards were half a percentage point behind RPI, which was the largest negative gap since the end of 2018.

The lowest paid employees saw a 4.85% pay rise on average, in line with the national minimum wage and national living wage increases that took effect on 1 April.

Workers aged 25 and over saw their minimum pay increase from £7.83 to £8.21, while similar percentage increases were made to the minimum statutory rates for younger employees.

XpertHR’s analysis of a sample of 203 pay awards in the three months to the end of April 2019 found:

  • the interquartile range – the range of the middle 50% of pay awards made during this time – stood at 0.8 percentage points, between 2% and 2.8% for the lower and upper quartiles respectively
  • almost half (45.9%) of staff received a lower award than in their previous review, 29.6% received a higher award and 24.5% received a pay award at the same level
  • The most common pay award was 2.5%
  • Few organisations had frozen staff pay rates

XpertHR pay and benefits editor Sheila Attwood said: “The latest reading of pay settlement trends is in line with our expectations – that pay awards will settle around the 2.5% mark this year. However, many of the current pay awards are lower than employees received in 2018, suggesting that there is little scope for higher rises this year.”

The median pay award in the private sector was 2.5% over the 12 months to the end of April, compared with 2% in the public sector.

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