Recent data from HR analytics provider Brightmine reveals that the median basic pay award in the three months leading up to July 2024 has fallen to 4.5 percent, down from a revised 5 percent in the previous rolling quarter.
This marks a return to the lowest level seen so far this year.
The report indicates a broader trend of declining pay settlements. A matched sample analysis shows that nearly three-quarters (73.1%) of pay deals are now lower than those secured for the same groups of employees a year ago, with only 7.7 percent of agreements offering an increase.
While the private sector experiences a dip in pay awards, the public sector tells a different story. Following Chancellor Rachel Reeves’ recent approval of a 5.5 percent pay rise for millions of public sector workers, the median pay award for the public sector in the 12 months leading up to July 2024 has risen to 6.1 percent.
This figure is notably more than a percentage point higher than the private sector’s median of 5 percent during the same period.
Pay awards will continue to slow
Despite a slight increase in inflation, with the Consumer Prices Index (CPI) edging up to 2.2 percent in July from 2.0 percent in June, experts anticipate that overall pay awards will continue to slow. Brightmine predicts a further reduction in pay settlements for 2025, compared to the past two years.
Sheila Attwood, Senior Content Manager for Data and HR Insights at Brightmine, commented on the findings: “Our measure of pay awards has dropped to its lowest level since March, signalling that we may see further declines following the fall from the 6 percent median recorded in 2023. Employers have already responded to decreasing inflation by implementing lower pay awards this year, a trend that we expect to continue.”
Key Findings from the Latest Rolling Quarter
Brightmine’s analysis, based on 48 pay settlements covering 743,755 employees that took effect between 1 May and 31 July 2024, highlights several key trends:
- Most Common Pay Award: The most common basic pay award was 5 percent, with more than half (57.4%) of all settlements falling between 4 percent and 5 percent. Specifically, 29.8 percent of pay awards were set at 5 percent.
- Narrowing Interquartile Range: The interquartile range for pay awards has tightened to 1.3 percentage points, with the lower quartile dropping to 3.7 percent and the upper quartile settling at 5 percent. In contrast, the previous three rolling quarters saw a range between 4 percent and 6 percent.
These findings reflect a shift in the economic landscape as employers navigate a changing inflation environment and adjust pay settlements accordingly.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
