Pay awards to peak at six per cent in 2023

These findings come from XpertHR, which also found that 90% of UK employees can expect a pay rise in 2023, while this pay rise will be more than they received in 2022 for 62% of people. Meanwhile three percent of employees are likely to have their pay frozen in 2023, with the outcome for the remaining seven percent still uncertain.  

Its research has, however, found that almost all employers (98%) have cited upwards pressure on their pay awards budgets – with the most common reasons for this being inflation and the cost of living (83%), as well as pay levels in the same industry (73%) and the ongoing skills shortage (67%). 

Additionally, the data show the rising national living wage – which will increase by 9.7% in April this year – is another factor putting pressure on their pay awards budget.  

XpertHR senior content manager, data and HR insights Shelia Attwood said: “The past year has seen pay awards rise to record levels – a pattern that continued into the early months of 2023. However, our forecast indicates that pay awards may have reached their peak and will settle throughout the course of the year.  

“The prevailing view among economic analysts is that inflation will ease back in the coming months, reducing the pressure on employers struggling to match price rises in their pay awards. Many organisations have struggled to meet employee expectations on pay over the past year.  

“Ways to address this over the coming year include weighting pay awards to the lowest paid, providing an evidence base to decisions, looking beyond pay to enhance the benefits package and clearer and transparent communication with employees on their reward package.”