39% of pay increases worth 6% or more

Around two-fifths (39%) of employees received pay rises worth 6% or more in the three months to January 2023, according to research by Incomes Data Research (IDR).

The research organisation analysed 75 pay deals implemented between 1 November 2022 and 31 January 2023, mostly at large organisations and covering more than 500,000 employees. It found that 15% gave employees a pay rise between 5% and 5.9%, 16% awarded increases between 3% and 4.9% and 13% gave rises of between 2% and 2.9%. Just 1% implemented pay freezes and no one introduced a 0.1%-1.9% rise.

The findings also revealed that the median pay award across the economy is 5%, which has remained the same since November due to a continued number of awards worth 5% or above.

Nearly half (47%) of private services organisations have awarded pay increases worth 6% or more since last November, with the upper quartile, where a quarter of increases are at or above, standing at 6.9%. This is higher than the figures for the manufacturing and production, and not-for-profit sectors.

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Manufacturing firms, which account for more than two-fifths of settlements in this sample, have seen a 5% median pay award, with two-thirds of increases worth 4% or more. When compared to the same period in 2022, one-quarter of awards were at this level and the median was 3%.

Zoe Woolacott, senior pay researcher at IDR, said: “We have observed large pay uplifts across the private sector in areas such as engineering, retail and parts of transport, storage and distribution with some employees receiving basic increases in excess of 9%. Such relatively high increases are likely to continue further into 2023 due in part to the influence of the forthcoming uplift in the national living wage, which will rise by 9.7% on 1 April to £10.42. Continued tight labour markets and elevated inflation will play a role too.”