By Andy Bruce
(Reuters) – British employers handed out pay deals worth almost 5% in the three months to April, the busiest month for annual settlements, according to a survey that adds to signs that pay growth – a major driver of inflation pressure – may be slow to dissipate.
Median basic pay settlements in the three months to April were 4.9% higher than a year earlier, up from 4.6% in the three months to March, according to human resources data provider Brightmine – previously known as XpertHR.
The Bank of England is closely watching pay data. Before they cut interest rates, most BoE policymakers want to see signs that annual wage growth is heading back to the 3-4% range from the most recent rate of 6%.
“We have seen a noticeable drop in the level of pay awards since last year – from 6% in 2023 to just under 5% in the first quarter of 2024,” Sheila Attwood, senior content manager at Brightmine, said.
“However, we are now noticing some stability, as the first April settlements are also centred on this level,” she added.
Employers surveyed by Brightmine in March expected the median pay award for 2024 to be 4%, while a BoE survey conducted in April showed employers anticipate pay growth of 4.6% over the coming year.
On Monday BoE Deputy Governor Ben Broadbent cited survey evidence from companies that showed a major driver of inflation pressure – strong wage growth – was likely to dissipate only slowly.
But with wages now outstripping inflation, Broadbent said that could put companies under less pressure to offer such larger pay increases in the future.
The Brightmine survey was based on 102 pay settlement between Feb. 1 and April 30, covering more than 355,000 employees.
