Pay awards continued to lag severely behind inflation this summer despite a slight dip in the consumer prices index (CPI) in August, according to XpertHR.
The average pay settlement in the three months to the end of August 2022 was 4%, unchanged for the fifth consecutive rolling quarter.
CPI was 9.9% in August, down from 10.1% the previous month, but this did little to close the gap between workers’ wages and rising prices.
XpertHR’s survey found a minority of organisations had sought to address the cost-of-living crisis in a number of ways, including offering an additional pay increase part-way through the year; giving staff a non-consolidated cost-of-living payment, with one professional services firm paying out £1,000 per employee; offering additional merit awards; and bringing forward annual pay reviews.
Pay in August 2022
Based on its analysis of 99 pay settlements effective between 1 June and 31 August 2022, covering more than one million employees, XpertHR found that 84% of pay awards were higher than last year.
The median pay award was 4% in the services sector and 3.5% in the manufacturing and production sector.
The average public sector pay settlement grew from 2.4% to 3% in the year to 31 August, while private sector pay rose from 3.5% to 3.7%.
Sheila Attwood, XpertHR pay and benefits editor, said: “While inflation dipped very slightly this month, the consensus remains that we’re by no means out of the woods and employees will continue to see a real terms pay cut. To bridge the widening gulf between pay and inflation, pay awards will need to rise significantly beyond the current 4% figure.
“For many businesses an additional across-the-board pay rise is not feasible, but we are seeing one-off payments and other financial assistance from employers to help ease the cost-of-living crisis.”
Separate research from employee experience platform Applaud showed that employees are increasingly demanding higher pay rises to help with rising living costs.
Sixty-four per cent of UK business decision-makers reported that they’d seen more employees asking for pay rises, while 67% said employees were voicing concerns about an impending recession.
Duncan Casemore, co-founder and CTO at Applaud, said: “Recessions are a scary concept, for business leaders and employees alike. Employees are worried about how they’re going to pay for soaring energy bills, as well as higher food and fuel costs. As such, leaders have to step up and reassure their workforce that they’re doing everything in their power to weather the storm.”