UK private sector workers face 'lowest pay rises in a decade'

Tom Belger
·Finance and policy reporter
·2 min read
A person wears a face mask as they walk through the city centre as the coronavirus disease (COVID-19) outbreak continues in Cardiff, Wales, Britain October 19, 2020. REUTERS/Rebecca Naden
Cardiff city centre as data shows pay rises are set to be more limited next year because of the coronavirus crisis. Photo: Rebecca Naden/Reuters

Workers in private-sector firms are set for the lowest pay rises in a decade over the next year, according to a business survey.

Millions of workers have already faced pay cuts and freezes since the coronavirus crisis hit, while redundancies have soared.

New analysis suggests pay restraint by employers is set to continue in the year ahead. A survey by XpertHR of 184 firms across the economy found they were expecting to offer median pay rises of 1% between now and next summer.

It would mark the lowest set of pay rises since June 2010, and less than half the 2.2% median private-sector rise seen last year.

Pay hikes are expected to be significantly higher in some sectors, including the utility firms, food, drink and tobacco companies, and not-for-profit companies surveyed.

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But average pay was expected to be frozen in many industries, from finance and professional and business services to hotels, catering, leisure, retail, wholesale, general manufacturing and engineering and metals.

Almost half of employers predicted pay awards would be lower in the year to come than last year.

Pay awards have already fallen to an average of 2.2% over the past year, according to XpertHR. Almost half of employee groups in the private sector received a lower pay award than the previous year, with only a quarter receiving higher pay.

Organisations are expecting this trend of lower pay awards to continue, with half (48.4%) predicting a lower award over the coming year.

“The devastating impact of the coronavirus pandemic on company finances has seen the value of pay rises fall to the floor over the past few months,” said Sheila Attwood of XpertHR.

“Many employers are not optimistic that they will be in a position to award a pay rise in 2021, with a pay freeze easily the most expected outcome of any pay review next year.”

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