Katherine Heffernan | 23 Jul 2019

Signs of upwards movement as pay pressures increase

While most respondents to last year’s survey of pay intentions for this year foresaw pay pressures remaining level, some predicted higher increases. These outcomes have been borne out by our monitoring of pay settlement data collected during 2018 and in the first six months of 2019 through IDR’s Pay Benchmarker service.

Where employers anticipated a change in pay award levels, they were more likely to expect higher increases for 2019 (21% of respondents). And this has proven to be the case in some sectors: the upper quartile in the private services sector (including retail and hospitality, finance, professional services and IT, for example) has ticked up, from 3.25% to 3.3%, suggesting more ‘higher-end’ awards at 3% or above. In manufacturing, meanwhile, both the lower quartile and median have risen slightly, indicating that the floor for pay increases has gone up here.  

Will pay awards continue in this direction? Early findings from this year's pay planning for 2020 survey suggest several respondents are experiencing increased pay pressures from various sources including continuing uncertainty around the UK’s exit from the EU – for example, due to the possibility of higher inflation or changes to labour supply, which could produce or exacerbate skills shortages – and market pressures. Meanwhile, many employers will be impacted if the Government’s plans to increase the National Living Wage (NLW) to 66% of average earnings comes to fruition, while a General Election and change of administration could see the statutory floor move to £10 for all employees aged 18 and above, should Labour form the next administration. 

The findings from this research will feed into our forthcoming report, Pay Planning for 2020. The survey results will also be presented at our conference, Pay Planning for 2020, on 19 September where you can hear from case study organisations and reward experts and compare notes with your peers at other organisations. To find out more, please contact us at sales@incomesdataresearch.co.uk or call us on 01702 669 549.