The median basic pay increase in the three months to the end of March 2022 was worth 3 percent, unchanged from the previous two rolling quarters, according to the latest data from XpertHR.

Pay awards remain at the highest level since December 2008 – when the headline award was at 3.6 percent – but now lag six percentage points behind retail prices index (RPI) at 9 percent.

The gap between inflation, as expressed by the RPI, and pay awards is the greatest since XpertHR’s records began in April 1984.

“While the current 3 percent median pay award is notably higher than the 1.2 percent recorded by XpertHR a year ago, the inflation rate was dramatically less than where it stands today. As a result, a deepening gulf between pay and inflation continues to develop, to the detriment of workers’ finances,” says XpertHR Pay and Benefits Editor, Sheila Attwood.

“How employers help staff manage the impact of inflation on their own finances could well impact their decision to stay and strive to support the company long-term, so a robust pay and benefits strategy is certainly not an area to be overlooked right now,” warns Managing Director of WorkLife by OpenMoney, Niamh McLaughlin.

 

Latest pay award findings:

Based on the outcome of 263 pay settlements with effective dates between 1 January 2022 and 31 March 2022, covering more than 460,000 employees, XpertHR also finds:

  • Almost all pay awards are higher than a year ago. An overwhelming 84.5 percent of the current sample have awarded employees a higher increase than they received at their previous review. Just 3.6 percent saw a lower increase, while the remaining 11.9 percent received the same award for the second year in a row.
  • Wide range of pay awards made. The middle half in the spread of pay awards shows the extent of bunching of deals around the median. In the latest analysis, the middle half of pay awards sit between a wide range of 2.5 percent to 4.8 percent. These figures are notably higher than recorded a year ago, when the lower quartile stood at nil and the upper quartile at 2 percent.
  • A quarter of employers settle at 3 percent. Our median pay award is also the most common in the sample, accounting for 22.9 percent of all basic pay settlements.

 

Salary increases for the private sector and decreases for the public

The pay awards scene for private sector employers has changed dramatically over the past year. In the three months to the end of March 2022, the median pay award among private sector employers is 3 percent, up from 1.2 percent a year ago.

But many employers are exceeding this, with the top quarter of deals worth 4.8 percent or more.

Based on a review of pay awards over the past 12 months, the median increase in the private sector is 2.2 percent, up from 1.6 percent in the 12 months to the end of March 2021.

However, pay awards in the public sector have moved in the opposite direction, falling from 2.5 percent in the year to the end of March 2021 to 1.4 percent in March 2022.

 

The cost-of-living crisis

“Two successive months of stagnant pay settlements set against ever-increasing inflation will give cause to concern for those struggling to contend with the worsening cost of living crisis,” warns Attwood.

“However, our provisional data for April should bring some optimism as we see a notable upturn in pay settlements for this month. As pay awards edge closer to the figures not seen since 2008, it speaks volumes of the position that both employers and employees find themselves in and should hopefully bring some comfort for the future,” says Attwood.

With April pay awards preview suggesting an increase is on the horizon, it is crucial for employers to maintain financial wellbeing programs and offer as much support to their employees in the meantime throughout this difficult period.