The median pay increase in the private sector has fallen from 3.4% to 3%, according to the latest monitoring figures from Incomes Data Research (IDR).
Its latest pay settlement figures are based on a sample of 32 awards from across the economy between 1 May and 31 July. This covered mostly large organisations and 683,512 workers in total. The results predominantly reflect the private sector picture, as very few awards in the sample are from the public sector and not-for-profit area.
Just 7% of all private sector awards in the three months to July were worth 4% or more, down from 38% in June. More than half (54%) of awards were worth 3% to 3.99%, an increase from 37% last month.
Meanwhile, the median pay award across the economy fell from 3.4% to 3% in the three months to July, the first time it has been at this level since December 2021. This has been influenced by a downward shift in awards, with fewer employers paying increases worth 4% or more.
Less than one in 10 (9%) of awards were worth 4% or more, down significantly from 39% in June. The largest cluster of awards, 53%, was in the 3% to 3.99% bracket, an increase from 35% last month.
In addition, pay rises between 3% and 3.99% were mostly in construction, financial services and hospitality. The median change is largely due to the analysis not including April awards, which were influenced by the national living wage increase. As a result, the median pay award in the three months to April was higher, at 3.5%, than it is now.
Zoe Woolacott, senior pay researcher at IDR, said: “April is by far the most popular month for pay setting, so the latest median is somewhat less representative of the overall landscape than trends established earlier in the year.”
Jennifer Leeder, partner in the employment and immigration team at Birketts, added: “Workers are facing a pay cut in real terms. This is because employers can offer smaller pay awards while inflation continues to climb, where the number of available candidates has increased and vacancies have reduced, particularly in higher paid sectors. When wages are stagnating and there is a rise in staff availability, employers may be tempted to restructure roles, freeze pay or reduce headcount. If they do, they must be able to justify such steps and should always follow a fair procedure.”
