New data shows the median basic pay award in the three months to the end of March 2024 dropped to 4.8% – a 0.2 percentage point decrease from the previous rolling quarter, finds the latest data from Brightmine.
Around half (56.1%) of pay deals in the first quarter of 2024 were worth less than the value of the award provided to the same group of employees last year. However, following a sustained period of high inflation, pay awards are now inching above the rate of inflation.
At the height of the cost-of-living crisis in October 2022, the consumer price index (CPI) stood at 11.1% in comparison to a median pay award of 5%. This gap has closed in the three months to the end of March 2024 with pay deals now standing at a median of 4.8%, while CPI sits lower at 3.8%.
Sheila Attwood, Brightmine senior content manager, data and HR insights, emphasises that although there has been a noticeable drop in the level of pay awards when compared to the peak of 6% recorded last year, there are now signs of stability starting to emerge. Pay awards are also starting to creep above the rate of inflation. Attwood explains:
While this may well be a result of 2024 pay award budgets being agreed when inflation was higher, organisations are also looking to their compensation offering to help as they battle skills and labour shortages. The first April settlements are also entering the scene, and we have seen a median basic pay award of 5% so far. This cements our view that pay awards will centre on the 5% mark over at least the first half of 2024.
Latest rolling quarter findings:
Based on 142 pay settlements that came into effect in the three months between the 1st January and the 31st March 2024, covering 398,976 employees – Brightmine found that:
- The most common pay rise given is 4%. Around a fifth (20.5%) of pay awards are worth exactly 4%. Close to two-thirds (63.1%) of basic pay awards were worth between 3% and 5%.
- Merit awards worth a median of 5%. The median merit award for the three months to the end of March is 5%, unchanged from the previous rolling quarter. For the most recent period, around a quarter (23.3%) of awards had a merit element.
- More than half of deals worth less than their previous deal. In a matched sample analysis, 56.1% of pay awards are worth less than the value of the previous deal.
Brightmine’s data highlights a shift in pay awards, now aligning more closely with the current inflation rate of 3.8%. This adjustment from the severe disparity during the peak of the cost-of-living crisis in October 2022 demonstrates a move towards economic stabilisation. Leaders must consider these trends in developing strategies that address compensation and labour shortages, ensuring a resilient economic environment.