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Pay settlements

Pay awards refuse to budge at 2%, according to XpertHR

by Jo Faragher 26 May 2017
by Jo Faragher 26 May 2017

Pay awards in the three months to the end of April 2017 remained steadfast at 2%, according to the latest data from XpertHR.

It is now more than three years since pay awards have been worth more than 2% – and more than eight years since they have been at 3% or higher, according to pay and benefits editor Sheila Atwood.

Pay award resources

Public sector pay 2017: public health

Pay awards: 25 May 2017

We also now have the largest negative gap between retail prices index (RPI) inflation, which is currently 3.5%, and pay growth, since December 2011.

However, XpertHR’s data did reveal a record low number of pay freezes over the three-month period, and signs that companies were paying higher pay awards at the top of the range.

Its other main findings were as follows:

  • half of all pay awards are worth between 1.5% and 2.5%;
  • 2% is the most common pay award, given to more than a quarter (26.3%) of employee groups;
  • this was the sixth consecutive rolling quarter where the pay award for manufacturing and production was 2%, but the first since December 2016 where the service sector median pay award was also 2%;
  • almost half (45.7%) of pay awards are higher than employees received a year ago, with less than one-third (31.8%) lower; and
  • the number of pay reviews resulting in a pay freeze is at the lowest level for several years, at just 4.5%.

In the public sector, most employers remain focused on the 1% pay award. April tends to be a month when public sector pay rises take effect, and most of the deals recorded by XpertHR were at this level.

In the private sector, by contrast, 2% is the benchmark pay award, having been made in 28% of pay reviews over the last three months.

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XpertHR pay and benefits editor Sheila Attwood said there was unlikely to be a shift above the 2% level in the short term.

“Despite some positive signs on pay awards over the last rolling quarter, such is the prevalence of the 2% pay award that we would need a considerable number of higher (or lower) pay awards to pull off a shift in the median from this level,” she said.

Jo Faragher

Jo Faragher has been an employment and business journalist for 20 years. She regularly contributes to Personnel Today and writes features for a number of national business and membership magazines. Jo is also the author of 'Good Work, Great Technology', published in 2022 by Clink Street Publishing, charting the relationship between effective workplace technology and productive and happy employees. She won the Willis Towers Watson HR journalist of the year award in 2015 and has been highly commended twice.

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