More than a quarter of awards are worth 6% or more
Press release June 2024
The median pay increase across the economy has remained at 5.0% in the three months to April 2024. However, analysis of 159 new pay deals implemented across the economy between 1 February and 30 April 2024 revealed that nearly a quarter of all increases were worth 6% or more and some of the highest increases are in excess of 9%. These most commonly occurred in areas such as hospitality and retail.
April remains the most popular month for pay setting with around half of annual increases typically taking effect at this time. This makes April a key milestone for the tracking of pay trends across the year, which also coincides with the annual percentage increase in the National Living (NLW). The latest uplift, of 9.8%, brought the statutory minimum rate for adult workers aged 21 and over to £11.44 per hour from 1 April 2024 and impacted pay awards at those firms where most employees are on the statutory floor and also at those organisations where staff are paid just above it.
Our latest analysis is based on a sample of 159 pay awards effective between 1 February and 30 April 2024, covering over 1.3 million employees in total, and highlights a number of trends that are pointing in different directions. On the one hand the upper quartile across the economy has risen to 6.0% (up from 5.8% in March) but at the same time there are indications from trends in the private sector that the previous upward pressure on pay awards may be waning.
The majority of awards in our analysis are in the private sector, where the median is lower than for the economy as a whole at 4.5% due to awards clustering in the 4.0% to 4.99% bracket. However, this has not pulled the upper quartile down. Instead, the upper quartile figure has risen from 5.8% in March to 6.2% in April due to a larger proportion of higher-end pay awards worth 6% or more. Some 30% of all private sector outcomes occurred at this level, which is up from a proportion of 24% in the three months to March. Elsewhere, the median pay award in both the public and not-for-profit sectors is 5.0% and outcomes in this latter area – although a minority – have helped buoy up the median for the wider economy.
Pay awards in the three months to April 2024 are generally higher than the current rates of both RPI and CPI inflation (showing at 3.0% and 2.0% respectively in the year to May 2024), which have been falling since last year. Wage rises tend to lag behind inflation, so the former are likely to eventually follow the downward trend in the latter.
“While the latest rise in the statutory minimum rate has influenced pay outcomes it is likely that the level of increase awarded by employers will follow the downward trend in inflation,” commented Zoe Woolacott from IDR. “At the same time, pay awards remain generally higher than at any point over the past two decades or more,” she added.
Ken Mulkearn, Director of Research at IDR, said: “Even though inflation has come down, the cost of living remains an issue, and labour markets are still tight in many areas, in part due to a rise in economic inactivity post-pandemic. These factors are helping to buoy up the level of pay awards, relatively speaking.”
Note for Editors
Incomes Data Research monitors pay reviews across the economy throughout the year and publishes findings in ‘Pay Climate’, our quarterly e-bulletin, with additional monthly updates on our website: https://www.incomesdataresearch.co.uk/.
Our data is used by all those concerned with decisions on pay, including employers in the private and public sectors, government bodies, trade unions and economists. We have conducted research for a wide range of clients including the Low Pay Commission and the Office of Manpower Economics, as well as for a range of employers and employee representative organisations.
For any queries relating to this research please contact Zoe Woolacott on 01702 669549 or zoewoolacott@incomesdataresearch.com or Ken Mulkearn on 07392 018997 kenmulkearn@incomesdataresearch.com.