The latest data from XpertHR has shown that the median basic pay award in the three months to the end of July 2022 was four per cent, unchanged for the fourth consecutive rolling quarter.
Pay awards are remaining at the highest recorded level since September 1992, but continue to trail rising inflation, lagging 5.4 percentage points behind the latest Consumer Price Index (CPI), which now stands at 9.4 per cent as of June 2022.
If inflation hits more than 13% in the fourth quarter this year, as predicted by the Bank of England, and pay awards continue to hold at four per cent, pay will lag a sizable nine percentage points behind inflation. Even at lower inflationary estimates from the likes of NIESR (prediction for CPI to reach 11 per cent), employees will be experiencing a considerable real terms pay cut.
XpertHR’s findings are based on the outcome of 68 pay settlements with effective dates between 1 May 2022 and 31 July 2022, covering almost 550,000 employees. Elsewhere the figures show manufacturing falling behind services sector but public sector pay awards picking up.
Large numbers of public sector workers who are covered by the public sector pay review bodies had their 2022/2023 pay awards announced at the end of last month. With many covered by the “pay pause” the year before, the increases mark a considerable uplift for employees, particularly the lowest paid. However, the below-inflation increases could trigger strike action among public sector workers. XpertHR recorded a median two per cent increase in the public sector over the 12 months to the end of July 2022, up from 1.4 per cent over 2021.
“Pay awards continue to remain stagnant, unchanged from the previous three rolling quarters at four per cent, in spite of soaring inflation,” said Sheila Attwood, XpertHR pay and benefits editor. “The latest rise in the Consumer Price Index, and predictions of an 11-13 per cent rise by the end of the year, are both indicators that we are by no means near the end of this volatile period.
“For many employees already struggling with the rising cost of living, the prospect of further inflation hikes, coupled with the energy price cap increasing from October, is likely to cause significant worry,” she added. “While important, pay increases aren’t the only means through which employers can help employees through the worst of the cost of living crisis. For example, offering free financial planning advice or discount packages to employees can help staff manage finances more efficiently and cut the cost of essential products and services.”
