British employers reduce pay awards amid slowing wage growth, with median basic pay settlements rising by 4.5% in the three months to July, the lowest increase since April.
Bollywood Fever: Pay awards granted by British employers have decreased during the three months leading to July, aligning with the Bank of England’s forecasts for a slowdown in wage growth, according to a survey released on Wednesday.
Human resources data provider Brightmine reported that median basic pay settlements were 4.5% higher in the three months to July compared to a year earlier. This marks the smallest rise since the three months to April and a decline from the 5% increase seen in the three months to June. Brightmine also indicated that pay deals are likely to slow further as we approach 2025.
“Employers that have made pay awards so far this year have already reacted to the falling inflation environment by putting in place lower pay awards than last year,” said Sheila Attwood, senior content manager at Brightmine. She added that this trend is expected to continue among those finalizing deals later in the year, with these employers likely agreeing to increases at lower levels than those observed earlier in the year.
Supporting this trend, a recent survey by the Chartered Institute of Personnel and Development revealed that employers plan to raise pay by 3% over the coming year. Similarly, a Bank of England survey of businesses pointed to a 4.1% rise.
Official data from last week showed that British pay grew at its slowest annual pace in nearly two years during the second quarter of 2024. Additionally, there was a surprising drop in unemployment, although this was based on a survey undergoing significant changes.
After maintaining interest rates at a 16-year high of 5.25% for nearly a year, the Bank of England cut rates on August 1. The BoE stated it would continue to closely monitor wage growth, with investors seeing about a one-in-three chance of a rate cut in September.
Despite the slowdown, pay on the official earnings measure is still growing at nearly double the pace the BoE considers compatible with keeping inflation at its 2% target.
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