Half of 2022 pay awards worth at least 3%

By Zoe Wickens 3rd February 2022 9:00 am

Employee pay rises have typically been worth about 3% in 2022, up from a median of 2% last year, according to fresh data.

Incomes Data Research (IDR) analysed 57 pay deals already agreed for 2022 and found that around half of reviews had concluded to give employees an increase of 3 per cent or more.

This is a sharp increase from last year, when only around one-fifth of pay rises were at this level.

Meanwhile, at the lower end of the distribution, pay freezes account for just 4% of review outcomes so far in 2022 so far, down from 17% for 2021 and back to standard pre-pandemic levels of less than 5%.

The proportion of pay awards worth between 0.01% and 1.99% has also fallen from 21% in 2021 to just 2% of all outcomes for the current year to date.

More than one-fifth of awards in the private services sectors are worth at least 4% this year. According to IDR, these higher pay rises are likely to continue as the national living wage that must legally be paid to all employees over the age of 23 rises by 6.6% to £9.50 on 1 April.

Its analysis further discovered that manufacturing firms had carried out the majority of pay reviews in the sample it analysed at the start of 2022. Around one-fifth of awards in this area were worth 4% or more, with the largest cluster of awards in the sector (52%) in the 2.0% to 2.99% increase bracket.

IDR said the public sector accounted for a significant proportion of pay freezes in 2021 as a consequence of government policy. Some healthy pay rises have already emerged in this sector this year, it added.

Zoe Woolacott, senior researcher at IDR, said: “We have observed large uplifts to basic pay due this year, with many employers responding to recruitment and retention issues by ensuring their pay remains competitive.

“The current high level of inflation is also an upward pressure that is forecast to continue.”