Brightmine’s latest data shows that pay rises in Britain stalled at 4% in the third quarter of September and will fall in the coming year.
The data from the three-month rolling period between 1 July to 30 September revealed that the majority of pay settlements were lower than in the previous year. Almost two thirds of them were lower.
The 18.4% split between those who increased pay and those who kept it at the same level was evenly distributed.
In the public sector, the median deal in the year to September was 5.5%. This is after a full 12-month period where it exceeded 6%. The overall median award remained high.
Brightmine’s analysis of the quarter is based on 64 settlements covering 433,000 employees.
The forecast for 2025 pay settlements is less optimistic. It predicts that the median award will be just 3%. This is almost 2 percentage points below the median award of 4,7% for the year ending August 2024.
Brightmine (formerly XpertHR), a business intelligence company, reported that businesses said the three most important factors influencing pay decisions in the coming 12 months were affordability (65%), the performance of the organisation (36%), and the cost-of-living (27%).
The half of the businesses surveyed said that skills shortages and pressures to match pay levels within their industry would positively influence pay increases.
The consumer price index (CPI), which measures inflation in the UK, fell to its lowest level since three and a half years last week. Retail prices index (RPI), the most popular inflation measure used by unions to negotiate pay, also dropped to 2.7%. This is its lowest level since April 2021.
Sheila Attwood is Brightmine’s senior content manager for data and HR insight. She said: “With economic stress mounting, organisations are re-evaluating their pay strategies and shifting their focus to enhancing employee benefits in order to balance employee expectations and the needs of the company.
While pay awards will likely decline by 2025, companies are finding creative ways to support and retain their employees, especially through addressing the skills shortages.
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