The latest data from XpertHR shows that pay awards are worth a median 5 percent in the three months to the end of December 2022.
This is equal to the previous month’s figure and more than double that recorded in the same period in 2021 (2.3%), illustrating the major shifts in the pay setting scene over a turbulent last 12 months.
The gap between pay settlements and inflation remains substantial and will likely continue to be so over the coming 12 months. The Consumer Prices Index rose by 10.7 percent in the 12 months to November 2022, slightly down from 11.1 percent in October, which marked a 41-year high.
More than a quarter of all pay reviews take effect from January each year and whilst it is unlikely that pay will rise substantially in the coming months, the latest data shows that neither is there any sign of settlement levels dropping to where they were in the same period last year.
Latest pay award findings:
Based on the outcome of 36 pay awards with effective dates between 1 October and 31 December 2022, covering 64,945 employees, XpertHR finds:
- Median at 5 percent: The midpoint basic pay award was 5% over the three months to the end of December 2022, the same as last month’s figure
- Interquartile range widens: Last month, four percentage points covered the middle half of wage deals (7% upper quartile, 3% lower quartile). Now the gap between the top and bottom quartiles has widened to five percentage points (8% and 3% respectively)
- Two-thirds of deals higher: Taking a matched sample approach, where the 2022 pay review is compared to the 2021 increase for the same group of workers, two-thirds (65.2%) are higher in the three months to the end of December 2022 than in the same period a year ago.
Public and private sectors shifts
In the private sector, the value of the median base pay award over the year to the end of December 2022 was 4 percent, exactly double that of a year ago. The chemicals, retail and transport sectors all saw a median basic pay award of 5 percent or more, the highest within the private sector.
However, the public sector has seen an even more dramatic movement in the median basic pay increase over the past year, rising to 3.8 percent in December 2022 from just 1.4 percent in 2021. This is likely due to many settlements being weighted in favour of employees at the bottom of pay structures.
Sheila Attwood, XpertHR senior content manager, data and HR insights, said:
“The cost-of-living crisis will continue to be front of mind for many pay setters as the turmoil of 2022 continues unabated into the new year. As the UK is faced with a period of recession, it is vital that employers seek to support their employees in the best way they possibly can, whilst doing their utmost to get the balance right between pay expectations and affordability.
“We have noted previously that several organisations have made off-cycle pay awards to help employees deal with the cost-of-living crisis. It will be interesting to see if this continues into 2023 or whether the forecasted fall in inflation from the middle of next year, together with the current 5 percent median pay award becoming the norm as we predict, will obviate the need for such measures.”
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.
- Amelia Brand
- Amelia Brand
- Amelia Brand
- Amelia Brand
