Pay awards plateau as high inflation continues, finds XpertHR
The latest data from XpertHR shows that the median basic pay increase in the three months to the end of June 2022 was 4%, unchanged for the third consecutive rolling quarter.
Despite holding at the highest recorded level since September 1992, pay awards continue to fall short of soaring inflation, now lagging 5.1 percentage points behind the latest Consumer Price Index, which stands at 9.1% (May 2022).
As the squeeze on household budgets continues and employers struggle to manage pay expectations, some workers have resorted to taking strike action, including rail staff who staged the biggest rail walkout for 30 years in June.
Latest pay award findings:
Based on the outcome of 324 pay settlements with effective dates between 1 April 2022 and 30 June 2022, covering almost 780,000 employees, XpertHR also finds:
- A wide interquartile range. The middle half of pay awards are worth between 3% (the lower quartile) and 6% (the upper quartile).
- Majority of pay awards are higher than the previous year. Among a matched sample of pay awards, 83% are higher than the same group received the previous year. Just 6.9% are lower and 10.1% are at the same level.
- Most common pay award is 3%. Pay deals worth 3% account for almost one in five (19.1%) basic awards, followed by a 5% increase which accounts for one in ten (10.1%) deals.
- Pay freezes are relatively rare. Only 3% of pay settlements resulted in a pay freeze in the three months to the end of June 2022.
Remainder of the year outlook:
XpertHR’s findings suggest pay awards may have reached their peak. As pay settlement activity across the private sector slows down in the second half of the year – just 16.3% of settlements in the sector typically occur between July and December – there is little sign of higher pay awards on the horizon.
However, there may be some upward pressure from public sector workers, many of whom are still waiting for an announcement on their 2022 pay award.
Sheila Attwood, pay and benefits editor at XpertHR, said: “Pay awards appear to have plateaued after a third consecutive rolling quarter held at a 4% median. Inflation, on the other hand, has showed no sign of slowing down, with the Consumer Price Index (CPI) expected to remain high through the second half of 2022. The Bank of England says inflation should begin to slow in 2023 and gradually drop down to 2% over the next two years.
“For the many people suffering financially, this year’s pay rises will not be enough. Employers should aim for pay rises that get as close to inflation as they can, to support their staff. They should also explore alternative ways that they can help – whether that be through benefit packages that supply discounts for the weekly shop, or financial guidance that advises staff on how to best manage their money, it all helps employees to weather the cost-of-living crisis.”