53% of employers planning pay rises of at least 5% in 2023

2023 payMore than half (53%) of employers said they intend to give staff pay increases of at least 5% in 2023, according to an Incomes Data Research poll.

The survey of 181 large private sector organisations found that 24% anticipated awarding an increase of 6% or more, and 25% intended to make pay increases of between 4% and 4.99%. Just 1% said they would give employees between 0.1 and 1.99%, with the same number implementing a pay freeze.

Almost three-quarters (72%) believed that the level of pay rise next year will be higher when compared to 2022. Meanwhile, 15% said that the level of pay rise in 2023 is likely to be the same as in 2022 and the remaining 13% expected 2023 pay awards to be lower.

When asked to indicate the main influences on their organisation’s pay decisions for 2023, 86% cited higher inflation, 82% noted the current labour market conditions, and 68% said employee motivation and morale. This was higher than the number of employers (55%) who cited this as an influential factor on pay decisions in last year’s poll.

The next most influential factor was the national living wage, as cited by 39%, while more than a quarter (27%) indicated that the real living wage was an influence on their pay decision for 2023. Just 8% said improved profitability was a key reason.

Zoe Woolacott, senior pay researcher at Incomes Data Research, said: “Higher inflation and increased labour market pressures proved to be the top two factors influencing pay decisions with over four-fifths of respondents citing these as one of the main influences. With inflation at 14% and the national living wage rising by 9.7% to £10.42 an hour on 1 April 2023, we may see a much higher median by the spring.”