Pay awards stand firm at sub-inflation 2.5%

Pay awards stable below inflation

Employers awarded a median 2.5% annual pay rise to staff in the three months to the end of May, according to data from XpertHR.

This level of pay award has remained unchanged since the beginning of 2019, and is the same as it was a year ago.

The current median pay award remains below the level of retail prices index (RPI) inflation, which was 3% in May 2019.

Just over 86% of pay awards are worth either the same or less than RPI, according to XpertHR. It has been suggested that RPI inflation may slow in the second half of the year, although pay awards are forecast to remain at their current level.

Based on a sample of 238 pay awards in the three months to the end of May 2019, XpertHR found:

  • The median basic pay award was 2.5%. Half of all pay awards fell within half a percentage point of this figure, with an interquartile range of between 2%  and 3%
  • Lower pay awards dominated, with 43.1% worth less than the same group of employees received in the same period a year ago. Around three in 10 were higher than (29.8%) or at the same level as (27.1%) the previous year
  • Around a quarter (26.1%) of pay awards were worth exactly 2.5%, followed by those at 2% (15.7%) and 3% (13.5%).

Public sector pay awards are worth a median 2.5%, with the most common awards being 2.5% and 2%, while in manufacturing and production and services, 2.5% was the median pay award in the same three-month period.

One factor influencing public sector pay has been the delay in publication of the civil service pay remit guidance until mid-June. This means most of the pay awards examined in the sample were from local rather than central government.

Among local authorities, the median pay increase in the three months to the end of May was 2.4%. Civil servants are again limited to a 1% average pay award although organisations have the “flexibility to spend up to a further 1% of pay awards” on their 2019/20 pay award.

Comparing pay awards over the past 12 months to the end of May 2019, the median pay award in the private sector was 2.5%, compared with 2.3% in the public sector.

XpertHR pay and benefits editor Sheila Attwood said: “Following a dip in the second half of 2018, the first half of 2019 is dominated by pay rises in the region of 2.5%. However, pay awards continue to sit half a percentage point below retail prices index inflation on the May 2019 data.”

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