The latest data from XpertHR shows that 91 percent of employees will receive a pay rise next year, with the median basic pay award in the 12 months to the end of August 2023 forecast to climb to 5 percent.
In the current climate, organisations are under pressure to increase the value of their pay awards to counter the impact of inflation and keep up with the labour market – nine in 10 (89%) say the increase is in response to the cost-of-living crisis, meanwhile more than three quarters (78%) attribute it to skills shortages.
However, there are also a number of factors that could pull pay rises in the other direction. More than half (53%) of organisations say there is at least one factor that would be a negative influence on pay award levels and of these, one-third (32%) said affordability.
The 2023 pay award forecast:
Based on responses from 323 private-sector organisations, XpertHR also finds that the predicted pay awards over the coming year are worth between nil and 15 percent. The middle half of deals is expected to fall within the relatively wide range from 3.5 percent to 6 percent.
The research also found that just 2.5 percent of forecasts are expected to receive a pay freeze. The majority of these are in the services arm of the private sector.
Also, three in 10 pay awards are predicted to be worth 5 percent. A pay increase of 5 percent is not only the median value but also the most common prediction, with 29.2 percent of reviews forecast to result in this figure.
Latest pay award findings:
Meanwhile, the median basic pay award in the three months to the end of September 2022 is 4 percent, unchanged for the sixth rolling quarter.
Based on the outcome of 98 pay settlements with effective dates between 1 July 2022 and 30 September 2022, covering more than 1.1 million employees, XpertHR also finds that the interquartile range widens slightly. The upper quartile is unchanged at 5 percent. The lower quartile has dipped to 2.9 percent from the revised level of 3 percent seen in the previous rolling quarter. Despite this change, the overall picture has remained fairly steady over the past three rolling quarters.
Also, the most common pay award is 5 percent. One in six (17%) basic pay awards are set at 5 percent, making this the most common award, while 14 percent are worth 4 percent.
The trend of higher pay awards also continues. Of a matched sample of 75 pay awards, 85 percent of employee groups have received a higher pay award than in the previous year. Among the remaining pay groups, 8 percent have received a lower award, and 7 percent the same.
Sheila Attwood, XpertHR pay and benefits editor, said:
“Should pay awards reach the median 5 percent set out in our forecast they will sit at a level XpertHR has not recorded since 1992. Organisations are under a great deal of pressure to increase pay in line with rising cost-of-living, but while inflation is clearly the most prominent factor likely to push up the value of pay awards, it is affordability that employers will ultimately have to consider when making the final decision.”
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.
