Pay awards remain flat as inflation continues to rise
The latest data from XpertHR shows that the median basic pay increase in the three months to the end of March 2022 was worth 3%, unchanged from the previous two rolling quarters.
Pay awards remain at the highest level since December 2008 – when the headline award was at 3.6% – but now lag six percentage points behind retail prices index (RPI) at 9%. The gap between inflation, as expressed by the RPI, and pay awards is the greatest since XpertHR’s records began in April 1984.
Latest pay award findings:
Based on the outcome of 263 pay settlements with effective dates between 1 January 2022 and 31 March 2022, covering more than 460,000 employees, XpertHR also finds:
- Almost all pay awards are higher than a year ago. An overwhelming 84.5% of the current sample have awarded employees a higher increase than they received at their previous review. Just 3.6% saw a lower increase, while the remaining 11.9% received the same award for the second year in a row.
- Wide range of pay awards made. The middle half in the spread of pay awards shows the extent of bunching of deals around the median. In the latest analysis, the middle half of pay awards sit between a wide range of 2.5% to 4.8%. These figures are notably higher than recorded a year ago, when the lower quartile stood at nil and the upper quartile at 2%.
- A quarter of employers settle at 3%. Our median pay award is also the most common in the sample, accounting for 22.9% of all basic pay settlements.
Private sector employers push awards higher
The pay awards scene for private sector employers has changed dramatically over the past year. In the three months to the end of March 2022, the median pay award among private sector employers is 3%, up from 1.2% a year ago. But many employers are exceeding this, with the top quarter of deals worth 4.8% or more.
Based on a review of pay awards over the past 12 months, the median increase in the private sector is 2.2%, up from 1.6% in the 12 months to the end of March 2021. However, pay awards in the public sector have moved in the opposite direction, falling from 2.5% in the year to the end of March 2021 to 1.4% in March 2022.
April 2022 pay award preview
Provisional analysis of April pay awards, the month in which 45.7% of settlements take effect, reveals a notable upturn in pay settlements. Early indications shows that the median pay award rises to 4%, with few pay freezes and the majority of deals higher than a year ago This is an acceleration in settlement levels not seen since the post-recession years of 2010-2011.
Sheila Attwood, XpertHR pay and benefits editor, said: “Two successive months of stagnant pay settlements set against ever-increasing inflation will give cause to concern for those struggling to contend with the worsening cost of living crisis. While the current 3% median pay award is notably higher than the 1.2% recorded by XpertHR a year ago, the inflation rate was dramatically less than where it stands today. As a result, a deepening gulf between pay and inflation continues to develop, to the detriment of workers’ finances.
“However, our provisional data for April should bring some optimism as we see a notable upturn in pay settlements for this month. As pay awards edge closer to the figures not seen since 2008, it speaks volumes of the position that both employers and employees find themselves in and should hopefully bring some comfort for the future.”
