Pay deals stuck at 2%

Annual wage settlements are yielding a median 2% pay award for employees, the latest data from pay analysts at XpertHR reveals. Measured over the three months to the end of April 2015, this is the 13th consecutive rolling quarter in which 2% has been the 'going rate' for pay awards.

So far in 2015, nine in ten pay awards have been worth the same or more than the April RPI figure of 0.9%. However, employers surveyed by XpertHR have reported that the key factor that is currently determining the level of pay rise is their company performance/ability to pay. XpertHR says: 'The lack of movement from a 2% pay award suggests that a large number of employers are yet to feel confident enough to make higher awards.'

Pay awards in the private sector are also running at 2% (median), while increases for public sector workers are centred on the 1% pay pot stipulated by government policy. Meanwhile, the median pay award in both the manufacturing and production sector, and private services, sits at 2%.

Key findings

Other key findings from XpertHR's analysis of pay awards in the three months to the end of April 2015 include:

• Deals converge around 2% – the middle half of pay awards are worth between 1.5% and 2.4%.
• Higher deals are rare – just one in 20 pay awards paid increases of more than 3%.
• Pay freezes diminish – just a handful of all pay deals (6%) resulted in no increase for employees.

A final word

"Employers continue to favour pay awards in the region of 2%, and we see no evidence of this changing over the remainder of the year. While this compares favourably with the current readings on inflation, we should not forget that pay awards were worth less than RPI inflation for almost five years." – Sheila Attwood, XpertHR Pay and Benefits editor.

Want to know more?

XpertHR is the "UK's most comprehensive online source of legal compliance, good practice and benchmarking information made available to HR professionals as a single subscription service".

Survey details: The latest quarterly analysis is based on 265 pay awards effective in the three months to the end of April 2015 that provide an identifiable increase in the lowest adult rate of pay.

• The median increase by number of pay reviews is the midpoint in the total spread of basic pay awards – i.e. the percentage at which half the pay reviews are at the same or higher value and half are at the same or lower value.
• 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.

XpertHR offers detailed statistics and analysis of pay settlements across the UK. The research is based on the largest sample of pay deals collected in the UK – XpertHR collects details of pay settlements for around 1,600 employee groups each year. Its database contains more than 37,000 pay settlements dating back to 1984. For more details visit www.xperthr.co.uk