20 March 2017

Analysis of the first pay awards of 2017

Analysis of the first pay awards of 2017 suggests how the year may shape up. The key points thus far indicate that the median for awards is around 2% - keeping it in line with the previous couple of years and broadly in line with the whole of 2016. However, some members still have auto-enrolment to tackle along with the implications of the living wage in certain areas of their business. This demonstrates the ongoing caution that employers are exercising when it comes to pay awards for the majority of employees.

Steady economic growth predicted by the Bank of England seems to be having little bearing on the level of pay awards, with the Bank's February 2017 Inflation report noting the "continued moderation in pay growth". Indeed, the February 2017 projections from the Bank assume that "regular pay growth does indeed remain modest". Equally, the movement in inflation is yet to be reflected in the level of pay awards. Higher retail prices index (RPI) inflation in 2010 to 2013 was matched by only modest pay settlements, and these levels remained steady when RPI fell to less than 1% in 2015. Our panel of economic forecasters predict that RPI will average 3.4% over the year - it was last at exactly this level in August 2006, when pay awards were running at 3%.'

For further general information from the Bank of England via their latest report - please visit their website