Research conducted by HR intelligence firm XpertHR has shown the median basic pay increase across the economy was just 2% in the three months up to July 2011.
XpertHR found that most employers are more likely to set wages according RPI inflation when setting wage increases, with more than 80% of those using a measure of inflation as a guide to the level of pay award.
Pay awards have been below the level of RPI inflation since the end of 2009, and there is no indication that this situation will change before the beginning of 2012. According to respondents to the survey earlier this year, affordability is the most important influence on the level of pay awards in 2011.
Because the majority of pay bargaining takes place in the first half of the year (over 75%), XpertHR predicts that although some employers will be obliged to comply with the National Minimum Wage, the majority of pay awards will continue to be at or below the current level.
XpertHR pay and benefits editor Sheila Attwood said: “The fragile job market, combined with consumption and demand continuing to be affected by factors including rising food and oil prices, means that we expect no significant, if any, increase in median pay awards for the rest of the summer.”
The findings are based on details of 99 pay awards collected by pay specialists XpertHR, with effective dates between 1 May and 31 July 2011.