Pay rises have fallen to their lowest level since June 2010, according to data released today.
Research by XpertHR found that the median basic pay increase (which excludes performance-related pay, bonuses and progression payments) in the three months to the end of October 2012 was just 1.8%.
With retail prices index (RPI) inflation rising to 3.2% over the same period, pay awards are now trailing the increase in prices by 1.4 percentage points, the first increase in the gap since April 2012.
RPI continues to be the inflation measure that the majority of pay setters use to benchmark their pay award.
The findings are based on pay awards from the public and private sectors. In the private sector the median pay increase over the past three months was slightly higher at 2%, but this is nonetheless lower than in previous years.
The dip in the level of pay settlements comes as some companies continue to freeze pay, while those at the top end of the range also remain cautious in their increases. The research found that just 8% of pay awards were worth more than 3%, compared with 58% over the same period in 2008, just before the start of the recession.
However, pay awards over the next year are expected to be slightly higher. An XpertHR survey of private-sector-employer pay forecasts found an overall prediction of 2.5% median pay increase over the year to the end of August 2013.
XpertHR pay and benefits editor Sheila Attwood said: “Respondents to our survey reported that ‘controlling paybill costs’ will be a top priority over the next year, and our latest figures on pay settlements reflect this in practice.
“We see continued caution in pay setting over the coming year, with 2.5% the expected benchmark pay award.”