The average pay settlement has fallen to 4.8% – its lowest in 18 months – with the median basic pay award expected to drop even further, to 4%, in 2024.
According to XpertHR’s analysis of 94 pay settlements that came into effect in the three months to the end of February 2024, covering almost 200,000 employees, the median pay award dropped for a second consecutive rolling quarter to 4.8%, 0.2 percentage points lower than the revised figure for the period to the end of January and the lowest since September 2022.
However, 4% was the most common pay rise given, covering a fifth of pay awards according to the February 2024 pay settlements data, while a quarter of deals were worth 6% or more.
February 2024 pay settlements
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The figures suggest that pay increases remain broadly above inflation, which dropped from 4% to 3.4% in February under the consumer prices index (CPI) measure.
The retail prices index (RPI), which trade unions tend to use to inform their pay negotiations but is not used as an official measure of inflation, was 4.5% in the 12 months to February 2024.
A separate analysis of 213 pay award forecasts for 2024, representing nearly 250,000 employees across 158 organisations, found that the median pay settlement is predicted to be 4%, but the most common award is set to be 5%, representing nearly a quarter of all forecasts.
Few pay deals are expected to be worth more than those in 2023 (19%). Close to half (47%) of forecast pay awards are expected to be lower than the 2023 award employees received.
Sheila Attwood, XpertHR senior content manager, data and HR insights, said: “Our forecast indicates the value of pay awards will fall further as we head towards April, the busiest month of the year for this activity.
“The fact that pay awards are now higher than CPI inflation shows that organisations are doing all they can to pay what they can afford to retain talent and are not looking to reduce pay awards as quickly as inflation is falling.
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“Employers know that they might struggle to match employee expectations on pay this year. They will be keeping a keen eye on inflation levels and what their competitors are offering. Organisation performance and affordability will also be key drivers of decisions on pay increase levels this year.”
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