Pay awards remain at 6%

The figure is unchanged from the opening quarter of 2023, which is in stark contrast to the past three years where there was ample variation in pay settlement levels between the first and second quarters.

Despite pay settlements standing at a median 6% – a historic high and two percentage points higher than the 4% recorded during the same period last year – they continue to lag behind inflation by a considerable margin and mean employees still face real-term wage cuts.

Based on the outcome of 267 pay awards with effective dates between 1 April and 30 June 2023, covering over 400,000 employees, XpertHR found that the most common pay award, made in just under a quarter (23%) of the deals recorded, was 5%. It also found that the majority of deals (75%) are higher than 12 months ago, around one in six are lower (15%) and 9% were pitched at exactly the same level in both years. Just 3% of pay settlements resulted in a pay freeze in the three months to the end of June 2023.

The median pay award for the public sector for the 12 months to June 2023 was 4.5%, which was lower than recorded in the private sector (6%). Both sectors experienced rises in the median pay settlement from the year before, which increased from 3% to 4.5% in the public sector, and from 3.5% to 6% in the private sector.

Last week Rishi Sunak announced pay rises of between 5% and 7% for several groups of public sector workers. However, with industrial action still scheduled to take place this month, it remains to be seen whether these increases will help to settle the current unrest between workers and the government.

Sheila Attwood, XpertHR senior content manager, data and HR insights, said: “This month’s data serves as a stark reminder of how long employees have been struggling with the gulf between pay and the rising cost of living. While pay awards are at their highest level since 1991, they continue to be outpaced by the UK’s high rate of inflation.

“The prevailing view among economic analysts is that inflation will ease back during the remainder of the year, although there is far from unanimity as to how fast, and to what level. It is important that employers consider other ways they can support staff as they continue to grapple with the effects of a real-terms pay cut.”