Pay rises plateau as road to recovery continues

Pay rises have stabilised at 1.5% after falling to zero in 2020 amid the COVID-19 pandemic.

Figures from XpertHR found the median pay rise in the public sector sat at 2%, compared to just 1.5% in the private sector.  

There was a notable improvement in the services sector between May and July, with 63% of pay awards worth 2% or more. This was the highest median pay rise recorded by XpertHR since last November.  

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Sheila Attwood, XpertHR pay and benefits editor, said: “2020 marked the worst year for pay awards since 2010, so it is welcoming to have seen pay deals rising and now stabilising.  

“It is likely that awards will remain at this level as employers are still regrouping and looking to strike the balance between recruitment and wider reward package costs.” 

Data collected by XpertHR, covering more than 687,000 employees, also highlighted more than half of all awards per employee group have risen (54%), while a quarter have reduced. 

While freezes accounted for a relatively small number of pay deals between May and July 2021, they represented half of pay settlements in the same period last year.  

Speaking to HR Magazine, Attwood added: “Pay awards showed rapid growth during the first half of 2021, but it’s possible we have now seen them peak. 

“Ongoing uncertainty around economic recovery means that organisations are being cautious when approaching annual pay reviews. This means that we’re unlikely to see a continuation of the rapid growth in pay awards we saw in the early months of 2021.”