The median basic pay award has fallen below 6% for the first time this year, dropping to 5.7% in the three months to the end of July 2023.
XpertHR’s analysis of 54 pay settlements effective May-July 2023, covering more than 500,000 employees, showed that the value of pay awards dropped as the rate of inflation slowed. The consumer prices index (CPI) was 6.8% in July 2023, down from 7.9% in June.
XpertHR said it expected the gap between pay growth and inflation to narrow throughout the remainder of the year.
Pay in July 2023
Wages yet to catch up with falling inflation
Hunt and Bailey call for wage restraint amid record pay rises
Sheila Attwood, XpertHR senior content manager, data and HR insights, said: “While the ONS announced last week that pay growth has hit a record high, our figures indicate that pay awards are likely to have hit their peak, as our research records a fall in the median pay award for the first time this year. However, both sets of data show that pay is still lagging behind inflation, leaving many employees struggling to manage the cost of living.
“A narrower gap between pay awards and inflation is certainly on the horizon, and while our figures of a decrease in wage rises might ease minds at Bank of England, fearful of the effects of a wage-price spiral, for employers there is room to provide more support. Aside from pay, employers need to consider other avenues to not only support employees but retain them too – so looking at benefits offered, training and development implemented, and flexibility granted.”
The most common pay award between 1 May and 31 July 2023 was 5%, which represented around one in six pay settlements effective during this period.
Three-quarters of pay settlements were higher than the award received by the same group of employees in 2022.
The lower quartile dropped to 4%, while the upper quartile was 8%. Only one in 10 deals were above 10%, with the highest standing at 13.5%.
The median basic pay award in the public sector in the year to the end of July rose to 5%, up from 3.2% in 2022. In the private sector, the median basic award was 6%.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
Reward, compensation and benefits opportunities
Browse all comp and benefits jobs
