Employees are typically receiving pay rises worth 5.0 percent in 2023, up from a median pay award across the whole economy of 4.0 percent overall for 2022, according to the latest monitoring figures from Incomes Data Research (IDR).
An analysis of 85 new pay deals already agreed for 2023 shows that over half (53%) of reviews across the economy have given or are set to give employees increases of 5 percent or more. This is far more than last year, when around a third of pay increases were at this level.
“Employers are also providing additional cost-of-living payments to help support employees at a time when inflation is higher than it has been. These one-off sums are not reflected in our figures for basic percentage pay awards” commented Zoe Woolacott from IDR.
Pay rises higher in private services than in rest of private sector
Firms in private services are making some of the highest awards across the economy, particularly those in financial services and retail. Nearly four-fifths of awards in these sectors are worth 5 percent or more this year and the potential for much higher increases is great, as many lower-paying employers will have to respond to the National Living Wage rising by 9.7 percent to £10.42 on 1 April 2023.
“The large uplifts in pay that we observed last year have become more commonplace in 2023, with many employers responding to the twin upward pressures of high inflation and recruitment and retention issues” commented Woolacott.
High-end pay awards
High-end pay awards are also predominant among manufacturing and production firms where more than two-thirds (67%) of awards in this area are worth 4 percent or more. Instances of such increases are occurring in many parts of the sector including energy and water, engineering and food manufacturing.
The latest pay settlement figures are based on a sample of 85 awards effective between 1 January and 31 July 2023, mostly at large organisations and together covering over half a million employees.
Very few awards in the sample are from the public sector and therefore the results predominantly reflect the picture in the private sector.
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.
