Just one pay award in five beats inflation

Pay awards are showing no signs of upward pressure over the final months of the year, according to the latest analysis from XpertHR. The median basic pay award stands at 2% in the three months to the end of October 2013, unchanged since the three months to April 2013. With few pay awards effective in the final months of the year, pay settlements are expected to stay at the same level for the remainder of 2013.

Pay deals have fallen behind the rate of retail prices index (RPI) inflation since December 2009. Despite the sharp fall in the level of RPI inflation to 2.6% in October, only one bargaining group in five in our quarterly sample has received either a basic pay increase or pay award from a merit budget increase set at or higher than the October inflation rate.

The outlook for the coming year is not much better, with the latest XpertHR pay prospects survey finding that private-sector employers are expecting to award pay increases of 2.5% at the median in the year to August 2014. For the public sector, the Government’s policy of restricting pay awards to an average of 1% will continue, so with RPI inflation expected to sit at around 3%, another year of below-inflation pay awards is a distinct prospect for many employees.

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