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Pay rises peak in cost of living crisis

The median basic pay increase in the three months to the end of June 2022 has remained at 4% for the third consecutive quarter, suggesting pay rises in the UK may have reached their peak.

Research from XpertHR showed the average pay rise remained 5.1 percentage points behind the current rate of inflation, which stands at 9.1%.

This is amid the cost of living crisis which has seen energy prices spike and plunge people into fuel poverty.

Pay rises during the cost of living crisis:

High earners prioritised for cost of living pay rises

Employees using cost of living to leverage better salary

Salaries failing to increase with inflation

Sheila Attwood, pay and benefits editor at XpertHR, said employers should be working hard to support their workers during this time.

She said: "For the many people suffering financially, this year’s pay rises will not be enough. Employers should aim for pay rises that get as close to inflation as they can, to support their staff.

"They should also explore alternative ways that they can help - whether through benefit packages that supply discounts for the weekly shop, or financial guidance advising staff on how to best manage their money, it all helps employees to weather the cost of living crisis."

Despite the apparent peak in pay rises, the majority (83%) are higher than the previous year.

Just 6.9% were lower and 10.1% were the same.

The most common rate of pay rise for the three months to June 2022 was 3% accounting for almost one in five (19%) cases.

Pay freezes were relatively rare across the quarter, occurring in only 3% of cases.

A lack of sufficient pay has sparked a rise in industrial action across the country, while several different groups such as the Royal Mail and NHS could be contemplating more strikes this summer.

Research from the Trades Union Congress (TUC) earlier this month highlighted the wage crisis in the UK.

Figures found the UK was set to experience the worst real wage squeeze of any G7 country as wages were forecast to shrink 6.2% - the equivalent of £1,750 - by 2023. 

TUC general secretary Frances O'Grady said fixing pay rises should be a priority for the government.

She said: “Years of standstill wages have left households brutally exposed to this cost of living crisis. The number one priority for Tory leadership candidates should be to get pay rising across the economy. This is the best way to give people long-term financial security and to stop families from lurching from crisis to crisis."