By David Milliken
LONDON (Reuters) – British employers agreed average pay rises of 6% with their staff in the first quarter of 2023, matching the record raises seen in data for the three months to January and February, industry figures showed on Wednesday.
The median 6% pay rise is the highest in data going back more than 30 years from human resources company XpertHR. The company said the first-quarter data was based on 272 salary reviews covering 510,000 employees.
“Although pay rises continue to reach record levels, UK employees will still feel the financial squeeze as inflation remains above expectations,” said Sheila Attwood, senior content manager at XpertHR.
Consumer price inflation dropped to 10.1% in March from 10.4% in February, but was above where the Bank of England forecast it would be earlier this year.
The most recent official wage data showed that average weekly earnings excluding bonuses in the three months to February were 6.6% higher than a year earlier, the same as in January.
April is a key month for pay deals between workers and employers, and comes at a time when many public sector workers are taking strike action.
“Tensions between employers and employees will be heightened, particularly in the public sector,” Attwood said. “Real-term wages are set to shrink and employers can expect workers to maintain their push for raises to shield themselves from rising living cost.”
The BoE forecasts inflation will fall sharply over the rest of this year, as energy prices have fallen and other price pressures are easing.
But the BoE’s chief economist, Huw Pill, said in a podcast released on Tuesday that both businesses and employees would need to reconcile themselves to a real-terms fall in their profits and earnings before inflation could be fully tamed.
“What we’re facing now is that reluctance to accept that, yes, we’re all worse off and have to take our share,” Pill said on the podcast produced by Columbia University’s law school.
(Reporting by David Milliken; Editing by Emelia Sithole-Matarise)
