The median pay award rose slightly to 2.2% over the latest three-month period to the end of 2010, according to the latest pay data from Incomes Data Services (IDS).
The median had remained at 2% for most of last year, and the latest increase takes it to the highest level it has reached in the aftermath of the recession.
The figures are based on 66 pay reviews, covering 1,920,120 employees.
The number of pay freezes has also continued to fall, with just 6% of recorded settlements resulting in freezes. This is the lowest level since the end of 2008.
In addition, the report indicated private sector pay settlements in 2011 could be higher than in 2010.
Although the median level of private sector pay increases has recovered somewhat in the post-recession period of 2010, it has lagged behind the rate of inflation, as this has risen sharply.
Inflation on the all-items retail price index (RPI) measure, which is typically used to set pay increases, did not drop below 3.7% in 2010, and spent much of the year above 4%.
Forecasts from City experts suggest RPI inflation will remain above 4% for much of 2011, which could put upward pressure on private sector pay awards. However, the majority of employees are unlikely to receive pay increases that match rises in the cost of living.
†IDS has now recorded 10 pay freezes in civil service departments, although in line with government policy there have been some modest rises for employees earning £21,000 or less.
Ken Mulkearn, editor of IDS Pay Report, said: “Private sector pay settlements could well rise in 2011, under the influence of higher inflation and the tentative economic recovery.
“But the increase in the cost of living, especially after rail fare rises, and the increase in VAT to 20%, means most employees’ pay will be chasing inflation.
“Meanwhile in the public sector, the government’s pay freeze policy means staff salaries there will fall even further in real terms.”
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