Median pay award in the private sector climbs to 5.8% in April 

Continued high inflation, persistent labour market challenges, and the National Living Wage are having an impact on pay awards, with the median increase in the private sector rising from 5.0% to 5.8% in the three months to April 2023. The upper quartile has risen by much more, according to the latest monitoring figures from Incomes Data Research (IDR). Nearly half of all increases in the sector were worth 6% or more and some of the highest increases are in excess of 9%. These most commonly occurred in areas such as energy and water, hospitality, retail and transport, storage and distribution.

“Pay rises in excess of 6% are common across the private sector as inflation remains elevated (despite the recent fall) and labour markets are still tight. The recent uplift in the National Living Wage (NLW) has also influenced the rising median”, commented Zoe Woolacott from IDR. 

Analysis of 141 new pay deals implemented between 1 February and 30 April 2023 from across the economy revealed that the median pay award across the economy is 5.6%. April remains the most popular month for pay setting with over two-fifths of annual increases typically taking effect at this time. This makes April a key milestone for the tracking of pay trends across the year, and which this year coincides with the largest percentage increase in the National Living Wage (NLW) since it was introduced in 2016. The latest uplift, of 9.7%, took effect on 1 April and brings the statutory minimum rate for adult workers aged 23 and over to £10.42 per hour. This will have had an impact on pay awards at those firms where most employees are on the statutory floor and also on those organisations where staff are paid just above it.

Elsewhere in the economy, over half of pay rises in the not-for-profit sector were worth 6% or more, largely influenced by the latest uplift to the NLW. Here the median has grown most – up from 4.5% in March to 5.9% in April – as employers compete with generally higher-paying public and private sector organisations to attract and retain staff.

One in 10 employers award lump sums

Around one in 10 employers in our sample have also made one-off payments to their workers. These are mainly aimed at assisting staff with the higher cost of living, though sometimes are connected to recruitment or retention issues. The payments range between £200 and £2,000 and occur in many sectors of the economy including care services and housing, financial services, local councils and retail.

“Lump-sum payments are excluded from our analysis of basic pay increases but our research has found that such sums awarded in the three months to April are typically worth £500 at the median for full-time employees”, commented Woolacott.

Note for Editors

Incomes Data Research monitors pay reviews across the economy throughout the year and publishes findings in ‘Pay Climate’, our quarterly e-bulletin, with additional monthly updates on our website: https://www.incomesdataresearch.co.uk.

Our data is used by all those concerned with decisions on pay, including employers in the private and public sectors, government bodies, trade unions and economists. We have conducted research for a wide range of clients including the Low Pay Commission and the Office of Manpower Economics, as well as for a range of employers and employee representative organisations.

For any queries relating to this research please contact Zoe Woolacott on 01702 669549 or at zoewoolacott@incomesdataresearch.co.uk