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National living wageLatest NewsPay settlements

Pay deals stuck at 4% in October

by Jo Faragher 20 Nov 2024
by Jo Faragher 20 Nov 2024 Pay awards refuse to budge as employers deal with economic constraints
Shutterstock
Pay awards refuse to budge as employers deal with economic constraints
Shutterstock

UK pay rises remained stagnant in the third quarter of this year, plateauing at 4%, according to data from Brightmine.

Its analysis of pay awards coming into effect between August and October, covering more than 240,000 employees, found the most common award to be a 4% pay rise.

A fifth of pay awards were worth this, according to Brightmine (formerly XpertHR), while 15% of pay deals were worth 3%.

Almost four in 10 (37.5%) of the latest pay deals were worth the same as the same group of employees received in 2023, it found. These were among the lowest pay awards for this quarter.

Just under a third of pay awards were higher than last year, and the same proportion were lower.

Pay awards

Pay deals stall in September and set to drop in 2025

Fujitsu tells employees they will receive no pay rise 

The awards in Brightmine’s analysis showed a wider range than in recent samples, with the interquartile range widening to between 3% and 5.5%. However, the range is markedly different to a year ago, when the lower quartile was 5% and the upper 8%.

The analysis was released just as inflation hit 2.3% in the year to October, a bigger-than-expected increase from 1.7% in September.

Gas and electricity bills pushed up prices in the Consumer Prices Index (CPI) measure of inflation, according to the Office for National Statistics, along with rises in the services sector such as hotels, airfares and haircuts.

Looking to 2025, businesses are anticipating economic constraints brought about by a 6.7% uplift in the national living wage and an increase in employers’ national insurance contributions.

Brightmine has forecasted a 3% median pay award for 2025, substantially below the statutory minimum wage rise.

Sheila Attwood, senior content manager for data and HR insights at Brightmine, said organisations were reviewing their offering to ensure it did not solely focus on pay.

“Managing workforce expectations will be critical in the coming year and employers should clearly communicate pay decisions to maintain employee engagement during times of financial restraint.

“Typically, this would involve sharing information about business performance and affordability to help employees understand the rationale behind pay award decisions.

“It is important that this information is shared early in the pay review process to manage employee expectations more effectively.”

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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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