Pay awards for the three months to the end of September grew slightly, from 5% to 5.4%, new figures have revealed.
Research carried out by XpertHR found that while settlements for this period had risen from the previous quarter, they remained lower than the 6% median recorded for most of the year.
The study, which examined the outcome of 66 pay awards between 1 July and 30 September 2023, covering almost one million employees, further discovered that around three-quarters (74.5) of deals were higher than last year. Nearly one in 10 (9.1%) were worth the same, while 16.4% of awards were lower.
According to the data, the most common settlement was 5%, with more than three in four (27.1%) worth this amount, while a further 14.6% of awards were 6%.
The median merit budget employers had set was 5%, and one in three (33.3%) of deals during the quarter were merit.
As a result of the findings, XpertHR expects the median pay award for the 12-month period to the end of September 2024 to be 5%, a decline of one percentage from the previous year.
Sheila Attwood, XpertHR senior content manager, data and HR insights, said: “After a year of strong pay growth driven by a tight labour market, signs of a cooling market are beginning to emerge, influenced by a sustained period of higher interest rates reducing both confidence in the economy and wage settlement demands. With inflation now on a downward trend, we are already seeing lower pay rises than in the first half of the year.
“For the coming year, around three-quarters of organisations sharing their pay forecasts see inflation and living costs continuing to put upwards pressure on their pay awards. We therefore believe that while pay awards will fall back, this will only be to around 5% as organisations balance employee expectations with affordability.”