According to new research, pay awards have reached 2 per cent in the three months to May 2021. 

New research from XpertHR reveals that pay awards have grown marginally over the last few months, with the median reaching its highest level for six months.

Between March and May 2021, the median pay award was 2 per cent, 0.1 percentage points higher than the figure recorded last month and back to the levels last seen at the end of November 2020.

Despite this, pay freezes are still evident with this pay settlement making up almost a fifth of the total amount (17.8 per cent).

Most notably, pay freezes were seen frequently among the services sector (20.6 per cent). However, within the manufacturing and production sector, pay freezes were half as common (10.7 per cent).

Additionally, the research highlights that the value of pay awards is falling behind the cost of living.

At present, the headline pay award is worth less than inflation on the Retail Prices Index (RPI) measure and has been worth less for the last six rolling quarters.

In addition, over half of the pay awards (55.3 per cent) are lower than the ones received by the same group last year whilst a quarter (25 per cent) are set at the same value. Only a small minority (20 per cent) have received a higher pay award since this time.

Pay awards within the public sector (2.5 per cent) are currently double the value than ones seen in the private sector (1.2 per cent). The research shows that this is well below the figure of 2.2 per cent recorded for the year to end in May 2020.

Sheila Attwood, XpertHR pay and benefits editor, said:

Whilst pay awards have edged up over the past few months, it feels as though a 2 per cent median award might be the ceiling for now.

While some employers are addressing labour shortages through higher starting salaries, when it comes to annual pay reviews many organisations remain unable to offer much or any increase.


*XpertHR has collected details of 228 pay settlements with effective dates between 1 March and 31 May 2021, together covering more than 940,000 employees.