The latest data from HR data and insights provider Brightmine shows the median basic pay award in the three months to the end of July 2024 was 4.5%, down from 5% (revised) in the previous three rolling quarter, returning to the lowest level seen this year.
Alongside the lower median basic pay award, most pay deals are also lower than the previous year's settlements for the same group of employees. A matched sample analysis shows that almost three-quarters (73.1%) of pay deals are now worth less than they were a year ago, while only 7.7% are worth more.
In contrast, public sector pay awards tell a different story. After Chancellor Rachel Reeves recently approved a 5.5% pay rise for millions of public sector workers, the median pay award in the 12 months to July 2024 reached 6.1%, more than a percentage point higher than the 5% recorded for the private sector.
However, despite a slight uptick in inflation, with the Consumer Prices Index rising to 2.2% in July from 2.0% in June, expectations remain that pay awards, in general, will continue to slow. A further decrease in pay settlements is predicted for 2025 compared to those seen in the previous two years.
Sheila Attwood, Brightmine senior content manager, data and HR insights, comments: “Our measure of pay awards has fallen to its lowest level since March this year, the first sign that increases may be about to take another step downwards following the fall from the 6% seen in 2023.
“Employers that have made pay awards so far this year have already reacted to the falling inflation environment by putting in place lower pay awards than made last year. This practice is likely to continue among those concluding deals later in the year, with this group also looking like they will agree increases at a lower level than those seen in the year so far.”
Latest rolling quarter findings:
Based on 48 pay settlements that came into effect between 1 May and 31 July 2024, covering 743,755 employees, Brightmine also found:
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Most common basic award worth 5%. More than half (57.4%) of all settlements that came into effect are worth between 4% and 5%, with 5% being the most common, accounting for 29.8% of pay awards.
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Interquartile range narrows. The interquartile range has narrowed to 1.3 percentage points, with the lower quartile dropping to 3.7% and the upper quartile to 5%. For comparison, the interquartile range for the previous three rolling quarters stood between 4% and 6%.
Pay review pattern - whole economy, July 2023 to July 2024
For more pay trends information for the rolling three months to the end of June, including sector insights, please click here.