Real Wage Growth Takes Hold

Employees are now enjoying a real terms increase in pay, according to the latest data from pay analysts at XpertHR. In the three months to the end of March 2015, the median basic pay rise awarded by UK organisations was 2%. This compares with RPI inflation at 1% and CPI at nil (March 2015 figures).

XpertHR’s headline measure of pay awards remained below RPI inflation between December 2009 and October 2014. With RPI now falling, employees are finally seeing their pay grow by more than the increase in prices for the first time in almost five years.

Other key findings from XpertHR’s latest analysis of pay awards include:

– Few deals at the higher end – just 5.6% of pay awards paid increases of more than 3%.

– Sectors converge – the median pay award in both the manufacturing-and-production sector, and private-sector services, sits at 2%.
– Pay freezes still evident – just under 10% of pay settlements resulted in no increase for employees.

– Public sector continues to lag – pay awards in the public sector were worth a median 1.5% in the 12 months to the end of March 2015, compared with 2% in the private sector over the same period.

– The 2% pay rise favoured by so many organisations at present looks set to continue to dominate, with the first pay awards effective in April 2015 also set at this level. April is the most common month for pay settlements to take effect, typically accounting for 40% of all pay reviews made during the year.

XpertHR Pay and Benefits editor Sheila Attwood said:

“The first April pay awards give us a good indication of the likely level of pay awards over the remainder of the year. The fact that employers are sticking to 2% suggests that higher pay awards are going to continue to be hard to come by.”