New data released by XpertHR reveals that pay awards during the second quarter of 2023, spanning three months until the end of June, maintained a median value of 6 percent, the highest level seen since September 1991.
This figure remains unchanged from the first quarter of 2023, marking a departure from the previous three years characterized by significant fluctuations in pay settlement levels between the first and second quarters.
Despite reaching a historic high and surpassing last year’s 4 percent figure by two percentage points, the median pay settlements of 6 percent continue to fall significantly behind inflation, resulting in real-term wage cuts for employees.
The key statistics
The latest findings, based on an analysis of 267 pay awards covering over 400,000 employees with effective dates between April 1 and June 30, 2023, highlight additional key points:
- Among the recorded deals, a 5 percent pay award emerged as the most common, accounting for just under a quarter (23%) of the total.
- The majority of deals (75%) resulted in higher pay settlements compared to the previous year, while approximately one in six (15%) saw lower settlements. For 9 percent of the deals, pay levels remained the same in both years.
- The interquartile range, which measures the spread of pay settlements, widened during this period. The lower quartile of settlements stood at 5 percent, while the upper quartile reached 9 percent. Notably, nearly a quarter (24%) of the deals surpassed the 9 percent mark, highlighting the extent to which some pay agreements exceeded the median statistic.
- Pay freezes were relatively rare, with only 3 percent of pay settlements resulting in no pay increase during the three-month period ending in June 2023.
A comparison between the public and private sectors reveals that the median pay award for the 12 months leading up to June 2023 was 4.5 percent in the public sector, lower than the 6 percent recorded in the private sector. Both sectors experienced an increase in median pay settlements compared to the previous year, rising from 3 percent to 4.5 percent in the public sector and from 3.5 percent to 6 percent in the private sector.
Sunak announced pay rises
Last week, Chancellor Rishi Sunak announced pay rises ranging from 5 percent to 7 percent for various groups of public sector workers. However, with scheduled industrial action this month, it remains uncertain whether these increases will effectively address the ongoing tensions between workers and the government.
Sheila Attwood, XpertHR’s senior content manager for data and HR insights, commented on the findings, emphasizing the prolonged struggle faced by employees in bridging the gap between their pay and the rising cost of living. While pay awards are currently at their highest level since 1991, they continue to fall behind the UK’s high inflation rate.
Attwood highlighted that economic analysts hold differing views on the future trajectory of inflation, with predictions of a potential easing during the remainder of the year. Nonetheless, she urged employers to consider alternative ways to support their staff as they grapple with the enduring impact of real-term pay cuts.
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
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