Pay awards stabilise for first time in two years

The latest data from XpertHR shows that the median basic pay increase is worth 2%, in the three months to the end of August 2021. The data suggests that 2% is now the new-normal, having dropped to a median nil award just over a year ago. Since that time, there has been a gradual increase in the value of pay awards, alongside a significant reduction in the numbers of companies implementing a pay freeze in place of any rise.

Over the year to the end of August 2021, pay awards in the private sector were worth a median of 1.6%, just a small increase from the 1.5% median recorded in the year to the end of July 2021. However, it is 0.4 percentage points below the 2% recorded for the year to the end of August 2020.

Meanwhile, pay awards in the public sector have settled at 2% in the year to the end of August 2021, compared with 2.5% in the year to the end of August 2020.

Latest pay award findings:

Based on details of 102 pay settlements covering more than 1.2 million employees, effective in the three months to the end of August 2021, XpertHR found the following:

• Majority of pay awards are higher. 61.5% received a higher award than in 2020 while 15.4% were awarded the same increase, almost a quarter (23.1%) saw a lower award this time around.
• Awards more tightly bunched. From a 2.5 percentage point range (between nil and 2.5%) a year ago, this has now narrowed to just one percentage point, between 1.5% and 2.5%.
• Pay freezes dwindle. A year ago, lower quartile measure stood at nil, indicating that at least a quarter of all pay settlements were worth nothing. Now, 6.9% of the settlements are recorded as a pay freeze, close to the long-run average of around 5% of pay awards in any given year resulting in a nil award.
• Public ahead of private. Pay awards in both the public and private sectors are lower than they were a year ago, but public sector outcomes continue to sit higher than those in the private sector.

Sheila Attwood, XpertHR pay and benefits editor, said:

“It’s been a turbulent time for pay setters, with last year employers postponing April 2020 pay reviews until later in the year – and in many cases then abandoning any increase altogether. Now, pay freezes are becoming much less common in the pay scene but are still evident, as shown in the data. Pay rises never fully recovered last year, but after a slow start at the beginning of this year, levels are now holding up.”