New data from XpertHR has revealed employers are willing to pay increasingly higher salaries to hold on to their talent – but that these levels have most probably peaked.
According to the data, the median basic pay settlement for the three months to the end of January 2023 was 6%, its highest level for 32 years.
This is up one percentage point compared to the previous quarter.
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Speaking to HR magazine, Sheila Attwood, XpertHR’s senior content manager (data and HR insights), said it was unlikely go any higher.
She said: “My feeling is that pay awards have probably topped out.
“I expect a tailing-off of awards towards the end of the year too to around 4-5%. What’s less clear, though, is whether this current 6% will carry through to the busiest time of the year for pay reviews, which is April.”
According to Attwood, the limited number of pay reviews done during the measuring period (110), were influenced by the dire news of rampant heating bills, and rises in the cost of living, which translated into organisations having more of an obligation to ‘do the right thing’.
She said: “There was certainly a sense that helping staff out was the only option employers had from a wellbeing and from a retention point of view. Whether this feels quite so urgent now is something that only time will tell.
“What we certainly saw, however, was that some employers were giving higher percentage pay rises to their lowest-paid staff, while managers and executives got a smaller percentage rise.”
Closer analysis of the data, which covered more than 240,000 employees, revealed 81.1% of settlements were higher in the measuring period than during the same period a year earlier.
It also found the middle 50% of pay reviews ranged between 4.5% and 7%.
A quarter of pay rises were 7% or higher, while the lowest offering was 2% and the highest was 10.9%, or 0.8% above the current rate of inflation (10.1%).
As the rate of inflation is still above 10% it means that for most employees, wage growth continues to be outstripped by the cost of living.
XpertHR predicts that the Consumer Price Index will peak at 10.1% this quarter and ease back to 4.3% in the fourth quarter of 2023.
Attwood added: “It may be that in the year ahead, employers seek to give a fair rise, but not a higher pay rise than what we’re seeing now.”
The price of fresh food rose to 15% in January, up from 14.3% in November 2022.
The price of certain products, such as eggs, have also risen by 85%.
Workers will now have to spend an average of £788 more this year on their supermarket food shop, according to the Consumer Price Index.