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Last year median pay awards seems to have remained around the 2% (according to latest data from XpertHR) and yet the Private-sector pay awards are expected to be worth 2.5% (a lot more if you are an MP) in the year to 31 August 2014.

Here are some key stats that  might influence your thinking:

  • Average weekly total pay in the public sector (at £489) remains higher than that in the private sector (at £473).
  • Whole-economy regular pay (average weekly earnings excluding bonuses) rose by 0.8% between August and October 2013.
  • RPI inflation stood at 2.6% in November 2013, unchanged from October, according to latest inflation data from ONS.   BCC expects RPI to average 2.9% in 2014, falling slightly to 2.8% in 2015. The CBI expects RPI to average 3.4% in 2014, and 3.1% in 2015.
  • CPI inflation fell by one percentage point to 2.1% in November 2013, its lowest level in four years. The  OBR expects CPI to run at 2.3% in 2014, 2.1% in 2015. The CBI says CPI will “average 2.5% in 2014, falling back to 2.1% in 2015, with upward pressure in the near future from the recently announced rises in domestic energy prices.
  • CPIH was 1.9% (down from 2.0%).
  • Whole-economy total pay (average weekly earnings including bonuses) rose by 0.9% over the three months to October 2013.
  • Total pay in the public sector (average weekly earnings including bonuses) fell by 0.3% when compared with a year earlier over the three months to October 2013. In contrast, total pay in the private sector rose by 1.3% over this period.
  • The Bank of England expects “continued robust growth” of 0.9% in Q4 2013.  The BCC predicts 0.8% GDP growth for Q4 2013. The CBI says growth will “soften” to 0.5% in Q4 2013.

Employment market

The latest Labour Market Statistics from the Office for National Statistics (ONS) show that 246,000 roles have been added by the private sector over the last quarter. 

Public sector employment has also increased (the first time it has risen since 2009) with 4,000 extra jobs were created in public sector organisations across the UK.

The CIPD has suggested that the 2014 will turn into a “jobs machine.” If true, that will put pressure on salaries and recruitment budgets. I am not so sure.  The EU will see more migration and that will help reduce some pressure for low paid jobs. Migration from the Portuguese and Spanish will continue to support the NHS.

What does this mean to employers? My bet, given the remaining mixed news on the economy, the medium private sector pay will rise cautiously by about 2.0% with the upper levels at 2.5% and smart employers will be looking to add more performance linked pay to boost morale at the coal face.  Another year of austerity, yes but one of change too – as employees jump ship chasing better prospects!

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