As 2024 draws to a conclusion, Zoe Woolacott examines the pay awards throughout the year and compares it to those of previous years.
According to our analysis, employees will receive a pay increase of around 4.5% by 2024. The results at the beginning of the year, which were around 5%, started to drop in April. They settled around 4% by July. In the latest figures for the three-month period ending in November, while the median rise remains at 4% the interquartile range is a bit lower. This trend is consistent with a generalised but slow decline in pay awards for this year. The previous highs were 5% in 2020 and 6% in 2022.
As inflation has decreased, the pay increase is still above the inflation rate. Pay awards will likely follow inflation if it continues to fall. Inflation is expected to remain steady in the near future, so pay awards may stay at their current level until the beginning of 2025.
In 2024, nearly four-fifths of all pay outcomes (78%) will be worth at least 4%. In 2024, the largest group of awards – 31 % – were between 4% and 4.99%. Our analysis shows that these high-end increases were dominant in the first half year. Exactly four-fifths of the pay increases that were effective between 1 Jan and 30 Jun had a minimum value of 4%. This proportion is lower, at only 35%.
A key upward pressure on salaries has been reduced by the falling inflation rate. The cost of living remains high, even though the rate of price increases was lower in the year 2024 than it was in the year 2023. The prices of items like food, rent, and mortgages remain higher than before the pandemic in 2024. This has kept employers under pressure to give more generous raises. The National Living Wage, which increased by 9.8% from April 2024 to April 2025, and tight labour markets also put upward pressure on many employers.
The average pay increase in the last decade was between 2% and 2.5%. Increases rarely exceeded 3%.
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The analysis by sector shows that the results in the public sector are slightly higher than those in the private sectors in 2024. In each case, the median award was 4.7% and the median award for the private sector was 4.5%. The different outcomes between the public and private sectors are a reflection of the pay cycle in each sector. Currently, the public sector is in a ‘catching up’ phase after lags in pay awards for a long period. Many of the current pay awards in the public sector are based upon recommendations that were made earlier in this year when inflation was high.
Our analysis is based upon a sample 547 pay awards that will be effective between the 1st January and 31st December 2024. These are mostly from large private sector organizations, which collectively cover more than 6,2 million employees.
