More than half (53%) of pay awards have given or are set to give employees increases of 5% or more in 2023, compared with a third of awards hitting that level last year, according to the latest monitoring figures from Incomes Data Research (IDR).
Almost three in 10 (28%) said they planned to give their workforce a pay rise of at least 6%, and 25% said they would award an increase of between 5% and 5.9%. The 4% overall median pay award across the whole economy in 2022 was 1% higher for 2023.
These figures were based on a sample of 85 awards effective between 1 January and 31 July 2023 at large organisations, covering more than half a million employees. The results predominantly reflected the private sector, as very few awards in the sample were from the public sector.
According to the analysis, private services firms, particularly those in financial services and retail, have made some of the highest awards across the economy, with nearly four-fifths of awards worth 5% or more this year. There is potential for much higher increases, as many lower-paying employers will be required to adhere to the national living wage rising to £10.42 on 1 April.
Two-thirds (67%) of awards among manufacturing and production firms were worth 4% or more. These increases have occurred in many parts of the sector, including energy and water, engineering and food manufacturing.
Zoe Woolacott, senior pay researcher at IDR, said: “Employers are also providing additional cost-of-living payments to help support employees at a time when inflation is higher than it has been. These one-off sums are not reflected in our figures for basic percentage pay awards. The large uplifts in pay that we observed last year have become more commonplace in 2023, with many employers responding to the twin upward pressures of high inflation and recruitment and retention issues.”