The latest data* shows that the median basic pay increase in the three months to end of February 2022 is worth 3%, unchanged from the previous rolling quarter.

Pay awards remain at the highest level since December 2008 – when the headline award was at 3.6% – but continue to fall behind inflation, which is expected to hit 7% in April.

Latest pay award findings:
Based on the outcome of 230 pay settlements with effective dates between 1 December 2021 and 28 February 2022, covering more than 268,000 employees, XpertHR also finds:

• Interquartile range remains wide. The lower quartile (at or below which the bottom quarter of pay awards lies) is at 2.5% and the upper quartile (measuring the top quarter of pay awards) is at 4.8%. In comparison, a year ago, in the three months to the end of February 2021, the lower quartile was at nil and the upper quartile at just 2% (with the median at 1%).

• Majority of pay awards at a higher level. Among a matched sample of pay awards, the majority (84.7%) of employee groups received a higher award than in the previous year. Just over one in 10 (13%) received a pay award at the same level and a handful (2.3%) were lower than the previous year.

• Pay freezes few and far between. Just eight pay deals among our current sample (3.5%) resulted in a nil increase for employees, compared with 34% this time a year ago.

2022 pay award forecast:
Alongside its usual pay award findings, XpertHR also collected responses from 303 organisations for its 2022 pay forecast survey.

It found pay rises are forecast for nine in 10 employees (89.8%) through 2022, meanwhile pay freezes are predicted to drop to 4.7% – compared to 18.5% the previous year. At the time of the survey the outcome for the remainder (5.5%) is still to be determined.

XpertHR survey respondents expect:

• Median pay award of 3% over the course of 2022.
• Pay settlements to be fairly widely spread in the range, with the middle half spanning two percentage points from 2.5% at the lower quartile to 4.5% at the upper quartile.
• 40% of pay awards to be worth 4% or more.

Sheila Attwood, XpertHR pay and benefits editor, said: “The recent increase in XpertHR’s headline pay award reflects employers trying to keep pace with rising inflation and contending with labour market shortages. But what would have been a reasonably high pay increase a year ago, global pandemic aside, now feels inadequate. With the latest predictions from the Bank of England suggesting that consumer prices index inflation could reach around 7% in spring 2022, a 3% pay rise equates to a notable real terms pay cut, as the gap between wages and the cost of living continues to widen.

“To mitigate the issue, some employers plan on offering one-off payments on top of the annual pay review and others are considering a supplementary non-consolidated payment to be paid quarterly for the rest of 2022 directly in response to the cost-of-living increases.”

*Study from XpertHR