Brightmine data shows that UK pay increases remained flat in the third quarter this year. They plateaued at 4%.
The most common pay award, which covered more than 240,00 employees between August and October, was a 4% increase in pay.
Brightmine (formerly XpertHR) says that a fifth of all pay awards are worth this amount, while 15% of all pay agreements are worth 3%.
It found that almost four out of ten (37,5%) of the most recent pay agreements were the same value as what the same group received in 2023. This was among the lowest awards of this quarter.
A little under a third (32%) of the pay awards this year were higher, while the same percentage were lower.
Brightmine’s award analysis revealed a larger range of awards than recent samples. The interquartile spread was between 3% and 5,5%. The range of awards is different from a year earlier, when the lower and upper quartiles were 5% and 8% respectively.
The analysis was published just as the inflation rate hit 2,3% for the year ending October. This is a higher than expected increase from 1,7% in September.
According to the Office for National Statistics (ONS), gas and electricity bills, as well as increases in services such hotels, airfares, and haircuts, pushed prices up in the Consumer Prices Index.
Businesses are preparing for economic challenges in 2025 due to a 6.7% increase of the national living wages and a rise in employer’s national insurance contributions.
Brightmine forecasts a median pay award of 3% for 2025. This is substantially lower than the minimum wage increase.
Sheila Attwood is Brightmine’s senior content manager of data and HR insight. She said that organisations are reviewing their offerings to make sure they don’t solely focus on the pay.
Employers should communicate clearly their pay decisions in order to maintain employee engagement, especially during financial hardship.
This would typically involve sharing information on business performance and affordability with employees to help them understand the reasoning behind pay award decisions.
It is crucial that this information be shared early on in the process of pay review to better manage employee expectations.
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