With inflation continuing to rise, pay deals at 2% are leaving us short

With inflation continuing to rise, pay deals at 2% are leaving us short

XpertHR’s research is based on the largest sample of pay deals collected in the UK, collecting pay settlements for around 1,600 employee groups each year. Their latest report shows that employers have given a median 2% pay award¹ to their employees over the three months to the end of May 2017. And if we take inflation as measured by the Consumer Prices Index (CPI), which is sat at 2.9% as of 13th June 2017², it means many of us are still feeling the pinch.

It’s a continuing trend that highlights that this is the sixth consecutive rolling quarter that pay awards have stood at 2%. And whilst it improved marginally at the latter part of 2016, we’re not seeing a return to the pay award levels from before the recession where awards rose in the lead up to 2009 from 3% up to 3.5% and beyond.

Based on a sample of 260 pay awards from across the economy effective between 1 March and 31 May 2017 (covering the pay awards for almost 3.3 million employees), XpertHR found that 50% of all pay awards were held between 1.5% and 2.5%, with 28.5% of that bracket giving 2%. And whilst 42.2% received a pay award that was higher than employees had received a year ago, 33.2% received lower. Pay freezes remained low at just 4.8%.

XpertHR pay and benefits editor Sheila Attwood said, “With inflation wiping out the value of many pay awards, employees are facing on ongoing pay squeeze. Although employers are making positive moves to address this – through not freezing pay, and giving higher awards than last year – there is still little sign that employees will start receiving more than 2% at their annual pay review.”


¹ The median increase by number of pay reviews is the midpoint in the total spread of basic pay awards. The basic pay award measured is the annualised percentage increase received by the lowest adult grade. It excludes any additional payments over and above the basic rise, such as bonuses, consolidation, increments and performance-related pay.

² www.ons.gov.uk/economy/inflationandpriceindices


Thursday, 29 June 2017

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