2024 pay awards forecasts range between 3.8 and 5%, with 5% the most common prediction, according to new research from Paydata.
The reward and HR consultancy sought out anticipated 2024 pay awards from 229 employers across a range of sectors between 5 and 20 July. The findings revealed that 32% of organisations predict a similar pay award in 2024 to this year of up to 5%, and 54% predict a smaller one of between 3 and 4%.
This analysis discovered that as inflation has risen, so have actual awards when compared with predicted ones the previous year, with predicted 2023 awards in July 2022 being 3 to 4% but are currently at 5%. Paydata does not anticipate the same incremental pay award increases between now and the end of 2024.
The most popular method of distributing pay awards in 2024 is an across-the-board increase for 38% of employers, while 33% will use a combination of across-the-board and individual increases.
The comparison of inflation to pay awards up until this year indicated that cumulative pay awards from 2014 to 2021 outstripped inflation, only for it to be overtaken by the end of 2022. This is due to average pay awards (3%) being below the average annual inflation (4.6%) in 2022.
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Tim Kellett, director of Paydata, said: “While some organisations may agree on a higher pay award to account for sustained high levels of inflation and the ongoing cost-of-living crisis, others cannot afford to maintain this year’s elevated awards. In June, the most commonly quoted 2024 award was 4%. By July’s pulse survey, the median had shifted to 5%.
“Where higher 2024 pay awards are unaffordable, they are focusing on the wider employee experience and what they can offer in lieu of generous pay increases, such as enhanced benefits, in particular healthcare, while also ensuring the culture they offer is inclusive and supportive. The grass isn’t always greener, so people who feel valued in their role and who are given the chance to develop will stay, driving down employee turnover in 2024.”