The going rate for pay awards continues to be just 2% despite better news on the economy, according to research from XpertHR based on pay deals covering almost one in four of the UK workforce (7.3 million workers). This is 1.3 percentage points below inflation as measured by the Retail Price Index (RPI) in August.

XpertHR has looked at pay awards over the 12 months to the end of August 2013, finding that the median pay increase over that period was just 2%, compared with 2.3% during the previous 12 month period. Key findings – based on 945 basic pay awards from a total sample of 1,231 deals – include the following:

• Private sector pay awards were worth a median 2% compared with 1% in the public sector. Over the same period a year ago, private sector deals were worth 2.5% while the median pay award in the public sector was a pay freeze.

• Wage freezes are finally playing a lesser role. So far in 2013, pay awards have made up 11% of all pay awards, compared with 18% in 2012 and 38% back in 2009.

• Manufacturing deals have been consistently higher than those in the services sector over the year, worth 2.3% over the 12 months to August 2013 compared with 2% in services.

• The most common single pay increase figure was exactly 2%, with more than half (58.2%) of pay awards worth between 2% and 3% inclusive.

• Analysis of a matched sample of settlements reveals that more pay awards this year were lower (45.5%) than the previous deal for the same group than were higher (26.6%), a reversal of the position exactly one year ago when more were higher (37.2%) than lower (33.1%).

Latest quarterly XpertHR pay figures

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XpertHR has also published its usual report on pay awards over the most recent rolling quarter, covering the three months to the end of August 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 2.6% (down from 2.7% the previous rolling quarter) and the lower quartile was 1.7%, down from 2% previously.

• Private sector pay awards were worth 2%, compared with 2.5% over the same three months one year previously.

XpertHR Pay and Benefits editor Sarah Welfare said:

"Our research provides further evidence that pay packets have taken a huge hit during this recession and the value of pay increases in real terms has been eroded. In fact, pay awards appear to have been slightly lower in value this year than the last. The current evidence points to more of the same, with no signs yet of any upward pressures on pay."

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