Private-sector employers expect to award their employees a pay rise worth 2.5% in 2014, according a study by XpertHR.

XpertHR's latest research on pay forecasts for the year to the end of August 2014 reveals that:

– Pay rises are expected to be worth a median 2.5%. Both manufacturing-and-production employers, and those operating in private-sector services, forecast a 2.5% median pay award over the coming year.

– The middle 50% of wage increases by value are expected to lie between 2% and 3%.

– The most common pay rises predicted for the coming year are 2% (cited in relation to 24.5% of awards) and 3% (24.2%).

– Pay freezes are expected to affect just 6.4% of pay settlements.

– The majority of employers (61.9%) expect their next pay award to be at the same level as their most recent one – confirming the expected pattern of more of the same subdued pay increases.

These figures compare with a median 2% pay award in the private sector over the year to the end of August 2013 (2.5% in the manufacturing and production sector; 2% in private-sector services). Over the same period, 12% of pay awards resulted in a pay freeze.

Employers will continue to take into account a number of different factors when considering the level of their next pay award. According to the research, company performance/ability to pay tops the list of issues that employers will consider, followed by inflation; pay levels at other organisations; and recruitment and retention factors.

However, these are set within a continued period of pay restraint – six in 10 survey respondents reported that they would be looking to control paybill costs over the coming year.

XpertHR Pay and Benefits editor Sheila Attwood said:

"Private-sector employers are predicting another year of subdued pay rises, with increases forecast to be worth around 2.5%. There are some positive signs, with fewer employers predicting a pay freeze, but awards expected to be worth more than 3% remain rare.

"Employers are likely to be keeping a close eye on the rate of growth in the wider economy and in turn in their own business, and how this impacts the demand for labour, before making any big decisions on pay."

Money - FreeFoto.com

Money – FreeFoto.com

Latest quarterly XpertHR pay figures:

XpertHR has also published its usual report on pay awards over the most recent rolling quarter, covering the three months to the end of September 2013. Key findings include:

– The median basic pay award over this period was 2%, unchanged since the three months to the end of April 2013.

– The upper quartile pay award was 2.5% (down from 2.6% the previous rolling quarter) and the lower quartile was 1.8%, up from 1.7% previously.

– Private sector pay awards were worth 2.1%, up from 2% over the previous three-month period.

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