Private sector median falls to 3.9%
Press release December 2024
The median pay award across the private sector has fallen from 4.0% to 3.9% in the three months to October 2024, according to the latest monitoring figures from Incomes Data Research (IDR). The proportion of increases worth between 4.0% and 4.99% in the sector fell from nearly half (47%) in the three months to September to around two-fifths (39%) this time. Meanwhile, the proportion of higher-end awards, worth 5% or more, has halved (down from 12% of our sample last month to 6% in October). These changes are mainly influenced by outcomes in manufacturing (see below). This is a relatively quiet time for pay awards in the private sector, something that is influencing the figures for the current period.
“The fall in the private sector median may be an indication that pay pressures are easing a little, together with signs of cooling in the labour market. However this dip in the median has occurred at the same time as an uptick in inflation and this could maintain pay outcomes at, or around, their current level” commented Zoe Woolacott from IDR.
Our analysis of pay outcomes for the whole economy reveals a median of 4.0%, 0.1 percentage point lower than that in the private sector. The overall median has been at 4% since July 2024 (see chart below). In our latest sample, the proportion of increases worth between 4.0% and 4.99% fell from 47% to 37% across the economy as a whole but, unlike the private sector on its own, the proportion of increases worth 5% or more has remained steady at around a fifth. These have been maintained by outcomes in the public sector. The median here continues to sit above those for both the whole economy and the private sector, at 4.9%.
Private services leads manufacturing
There are differences within the private sector. The median pay award in private services has held steady at 4.0% with the largest cluster of awards continuing to occur in the 4.0% to 4.99% bracket. However, the proportion of outcomes in this bracket fell from half in the three months to September to 44% in October. Analysis of awards in manufacturing reveals a different picture. Here the median fell steeply from 4.0% to 3.0% in the three months to October, mostly due to there being fewer awards at 4% or above in the current period. However, as with pay setting generally, this is a relatively quiet period for manufacturing awards, which typically dominate the start of the year.
Public sector
In contrast to the private sector, the median in the public sector rose from 4.8% to 4.9%. The median has been equal to, or higher than, the private sector median throughout 2024. This reflects the cycle of pay between the two sectors, with the former currently in the ‘catching-up’ phase, after a lengthy period in which pay awards lagged behind those in the latter. This is due to a number of higher-level rises worth 5% or more that have been agreed for thousands of public sector workers this year. Many current public sector pay awards are based on recommendations made much earlier in the year, when inflation was higher.
The latest pay settlement figures are based on 30 pay awards from across the economy effective between 1 August and 31 October 2024, covering over 830,000 workers.
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.