The National Living Wage and rising inflation are impacting wage rewards, with the median dropping from 3.0% to 3.5% for the three months to April 2022, and the top quartile rising much more, according to the latest revenue monitoring figures from Research Data (IDR).
An analysis of 70 pay deals in effect between February 1 and April 30, 2022 finds that more than two-fifths of revisions across the economy gave employees increases of 4% or more, the largest group – 31% of all salary results – occurring in the 5%+ bracket. This is much more than the same period last year, when only about one in twenty salary increases were at this level.
April is the most popular month for wage setting and the annual National Living Wage increase is a key influence, especially for lower-paying employers. This increased by 6.6% on 1 April 2022 to £9.50 and is likely to be a significant factor in the rewards aggregation to the higher 5% tier.
“Pressures in the labor market and the rising level of inflation since last summer have prompted employers to respond with relatively higher wage increases than last year,” commented IDR’s Zoe Woolacott .
Meanwhile, at the lower end of the distribution, our monitoring found that fewer employers are implementing rewards below 2% this year. Increases at this level represent only 3% of the results, compared to 38% for the same period in 2021.
In private services, wage increases of 4% or more are common in areas such as financial services and retail. A number of large banks have set their annual salary budget at over 4% this year. And major retailers have raised their pay rates even further. Meanwhile, in manufacturing, more than two-fifths (42%) of wage results were worth 4% or more – up from 28% in March – with examples in various industries such as agriculture, energy and water and general manufacturing.
The latest pay settlement figures are based on a sample of 70 awards effective between February 1 and April 30, 2022, mostly at large organizations and together covering more than 800,000 employees. Very few of the scholarships in the sample are from the public sector and therefore the results mainly reflect the situation in the private sector.