The Brightmine report reveals a consistent median basic pay award of 4.9% in the three months to June 2024, aligning with the previous quarter’s figures.
- Inflation targets were successfully met by the Bank of England in May, dropping from a peak in 2022, influencing future pay settlements.
- Pay settlements show stability with fewer high increments, and an anticipated shift due to inflation stabilization.
- Economic forecasts for 2025 suggest significant consideration due to new government proposals affecting wage dynamics.
- The majority of pay settlements in the recent quarter ranged between 4% and 5%, reflecting a predominant pattern in wage awards.
Brightmine’s latest data indicates that the median basic pay award remained steady at 4.9% for the three months ending in June 2024, unchanged from the prior quarter. This steadiness comes in the context of the Bank of England reaching its 2% inflation target in May, a substantial decline from the 11.1% peak experienced in October 2022, shaping current and future wage settlements.
As inflation levels stabilize, there is an expectation for a more stable approach to employee compensation. Many settlements, however, still hover below the 5% mark, with fewer instances of excessively high pay awards compared to last year. Brightmine forecasts a reduction in settlement levels for 2025, attributed to shrinking inflationary pressures.
Recent government proposals may further impact wage structures. The new Labour government suggests amending the Low Pay Commission’s scope to incorporate cost of living considerations alongside median wages and economic conditions. This includes potential changes in age-related minimum wage rates, foreshadowing increased costs for employers and necessitating revised pay strategies.
During the reviewed period, 16.3% of basic pay deals surpassed the 7% threshold, primarily benefiting employees on the national living wage, who enjoyed a 9.8% increase in April 2024. Excluding these scenarios, the median settlement was noted at 4.3%. The predominant wage award observed was approximately 4%, with 47.3% of all settlements fitting this range.
Interestingly, in a comparative analysis, three-fifths of pay deals were less favorable than those granted in 2023 to the same employees, pointing towards a cautious yet decisive wage-setting environment.
The persistence of a 4.9% median pay award highlights a stable economic climate with forthcoming policy shifts likely to influence future outcomes.
