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Pay awards stay low despite rising inflation

Pay deals dipped at the end of 2016, while the first 2017 settlements to take effect suggest a subdued start to the new bargaining year, according to pay analysts. 

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XpertHR reports that pay awards across the economy in the three months to the end of December 2016 stood at 1.9%, with half worth between 1% and 2.1%. Most deals gave employees an increase worth the same or less than at their previous review, with just one in six getting a higher increase than last time around.


Since September 2016, XpertHR’s headline measure of pay awards has fallen below the level of retail prices index (RPI) inflation (following almost two years of real-terms growth in wages). The gap between pay awards and RPI continues with this latest release of data. The median pay award now sits 0.6 percentage points below the 2.5% RPI for December 2016.


A year in review


2016 as a whole was subdued in terms of pay awards. Across the private sector, the median award was worth 2%, while the 1% in the public sector was in line with government policy. Around one quarter of all pay awards were at exactly 2%.


Pay freezes were still evident, while the highest pay increases were often linked to the introduction of the National Living Wage in April 2016.


The highest median pay award was in the construction sector, at 2.5%. In contrast, the lowest was among not-for-profit organisations (1%).

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