Pay awards to trend down but range will persist
Two-thirds of employers anticipate awarding lower increases to staff in 2024 compared with this year, according to IDR’s recent poll of employers’ pay intentions. Meanwhile, 27% said that the level of pay rise in 2024 is likely to be the same as the level of increase awarded in 2023 and just 7% of employers in the sample expect that pay awards in 2024 will be higher when compared to this year’s outcomes. These findings hint at an easing of pay pressures. However, the research also revealed that higher-end pay rises, worth 4% or more, will remain common.
These findings come from our poll of 158 mostly medium and large private sector employers, many of whom (78%) are yet to decide their precise pay rise for 2024. We asked this portion of participants what the level of pay rise is likely to be next year and nearly half (46%) anticipate awarding a pay rise worth between 4% and 4.99% in 2024. Nearly a quarter (24%) said that the main pay rise for staff in 2024 is likely to be at least 5%.
Elsewhere, those participants that have already agreed their 2024 pay rise told us how the increase compares to 2023. In half of cases the increase to be awarded next year will be lower in comparison to 2023 but around a third (32%) have decided to award a higher increase next year. By sector, pay increases already awarded by employers in manufacturing are most likely to be lower next year in comparison to 2023, which echoes the findings among our sample that have not yet decided next year’s pay award.
Affordability and competitiveness are key influences on pay
Survey participants were asked to indicate the main influences on their organisations’ pay decisions for 2024. Affordability and pressure to remain competitive proved to be the top two factors with around four-fifths of respondents citing these as one of the main influences – 85% and 80% respectively. The third most influential factor in pay decisions this year is inflation, as indicated by 69% of participants. This proportion, while it has fallen from 86% in a similar poll we conducted regarding pay intentions for 2023, shows that inflation and the cost of living continues to figure highly in employers’ concerns.
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