• Pay awards in the three months to 30 June 2021 stands at 2%
• The most common pay award is now a 2% pay rise, overtaking pay freezes for the first time this year

The latest data from XpertHR shows that pay awards in the second quarter of the year are worth double those in the first quarter of 2021. However, this acceleration won’t continue as research suggests pay awards have reached their peak, for now. In the three months to the end of June 2021, pay awards were worth a median 2%, remaining steady and unchanged for three consecutive rolling quarters. The increases over the second quarter of the year are therefore double those in the first quarter, with the median award in the three months to end of March 2021 recorded at just 1%.

The value of pay awards in the public sector has fallen for the first time in almost three years. Since the 12 months to the end of August 2019, public pay sector growth has been fixed at 2.5%, and notably above the private sector since the end of 2019 but has slipped to 2.3% for the 12 months to the end of June 2021. The Government in Westminster has implemented a pay “pause” for much of the public sector for the 2021 pay round, with an exception for NHS staff and the lowest-paid workers, with those earning annual salaries below £24,000 (full-time equivalent) receiving a minimum increase of £250.

The latest quarterly data shows that private sector pay awards have started to pick up, with the median sitting at 2% for the third consecutive quarter. Food manufacturers, chemical companies and retailers continue to record the highest pay awards in 2021 so far.

More than a year ago, the proportion of pay freezes started to increase as organisations’ pay award plans in April 2020 started to waver. However, since summer of last year, there has been evidence of a reverse, with the proportion of pay freezes declining with every set of new figures each rolling quarter. In the manufacturing and production sector, pay freezes are now relatively uncommon, with just 7.5% of deals resulting in a nil increase.

Latest pay award findings:

Based on details of 267 pay awards effective 1 April and 30 June 2021, XpertHR also found the following:

• Upper quartile nudges higher. The upper quartile – marking the cut-off point for the highest 25% of deals – has crept up to 2.3%, a rise of 0.1 percentage point on the previous rolling quarter. The lower quartile remains unchanged at 1% for the third consecutive rolling quarter.
• Pay freezes continue to fall. The proportion of all pay reviews resulting in a freeze for employees has fallen again, now accounting for 15.9% of all reviews in the current period.
• Service sector suffers small dip. Pay awards in the service sector – at a median 1.9% over the latest quarter – have slipped behind those in manufacturing and production (maintained at 2%).
• Lower awards prevail. Based on a matched sample, we continue to see slightly more than half (54%) of pay awards in the current period being worth less than the same group of employees received a year ago. Around a quarter (25.1%) are at the same level as a year, while the remaining 20.9% of deals made a higher award this year.

Sheila Attwood, XpertHR pay and benefits editor, said:

“As we navigate the post pandemic world, organisations are understandably still being cautious in their approach to annual pay reviews, and whilst we have seen some growth from the awards made in the early months of the year, we are unlikely to see this level of acceleration continue. Despite this, it is still encouraging to see the proportion of pay freezes decline in 2021 as confidence returns.”