UK pay settlements lowest in nearly two years, IDR survey shows
2024.09.11 19:46
By Suban Abdulla
LONDON (Reuters) – Pay awards granted by British employers fell during the three months to July, according to a survey that chimed with an official gauge of cooling wage growth that should keep the Bank of England on track to cut interest rates later this year.
Incomes Data Research said on Thursday that the median pay settlement awarded by major employers dropped to 4.0% in the three months to July, the lowest since August 2022 and down from 4.8% in the three months to June.
The most recent figures no longer include pay awards that took effect in April, the most popular month for pay setting, when 16% of settlements were worth 9% or more, partly due to a 9.8% uplift Britain’s minimum wage.
Zoe Woolacott, senior researcher at IDR, said pay levels had not yet caught up with the sharp rise in the cost of living in 2022 and 2023, despite current consumer price inflation being close to the BoE’s 2% target.
“Prices for items such as food, as well as mortgages and rents, remain higher than before the pandemic,” Woolacott said.
“This maintains pressure on employers to award their workers with a pay rise that compensates them to some extent for the higher cost of living.”
Data from the Office of National Statistics on Tuesday showed British pay growth cooled in the three months to July to a more than two-year low of 5.1%.
The BoE, which is expected to hold interest rates at 5% on Sept. 19, is keeping a close eye on wage growth. It expects private-sector pay to slow to 5% later this year and 3% in late 2025.
The IDR analysis was based on 39 pay deals which covered more than 700,000 employees and took effect between May. 1 and July 31.
