UK heads for fourth year of sub-inflation pay awards

Pay awards in the UK are set to fall short of inflation for a fourth consecutive year, according to pay data specialists from XpertHR.

In the three months to the end of May 2013, XpertHR found that the median basic pay award stood at just 2%. Retail prices index (RPI) inflation was 3.1% in May 2013 and is forecast to remain above 3% for the rest of the year.

Since the beginning of 2010, the median basic pay award has been worth less than RPI inflation.

XpertHR pay and benefits editor Sheila Attwood said: “The combination of subdued pay awards and elevated inflation will leave many employees out of pocket for yet another year.

“Employers are continuing to exercise caution when it comes to reviewing their pay bills, and we see no sign of a sustained upturn in pay settlement levels this year.”

According to XpertHR research, employers are predicting a median 2.5% pay award over 2013 as a whole. With no signs of increase in the level of pay awards, employees face a fourth consecutive year of pay falling behind inflation, representing a pay cut in real terms.

A full analysis of pay settlements in the three months to the end of May 2013 reveals:

  • the median whole-economy basic pay increase was 2%;
  • the median pay award among manufacturing companies (2.5%) was notably higher than the services sector (1.9%);
  • the most common pay increase was 2%, representing almost one-fifth of pay awards; and 
  • the proportion of pay awards resulting in a pay freeze continued to fall and now stands at just under one in 10.

Further detail, charts and commentary are available on XpertHR.

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