Pay Awards Fall in Britain

By Suban Abdulla

LONDON (Reuters) – Pay awards granted by British employers fell during the three months to July, according to a survey aligning with a cooling wage growth measurement expected to influence the Bank of England’s interest rate decisions later this year.

Incomes Data Research reported that the median pay settlement awarded by major employers dropped to 4.0% in the three months to July, the lowest since August 2022, down from 4.8% in the three months to June.

Recent figures exclude pay awards effective in April, typically a busy month for pay setting, when 16% of settlements were worth 9% or more, largely due to a 9.8% increase in Britain’s minimum wage.

Zoe Woolacott, senior researcher at IDR, remarked that pay levels have yet to match the sharp rise in living costs from 2022 and 2023, despite current consumer price inflation nearing the Bank of England’s 2% target.

She stated, “Prices for items such as food, as well as mortgages and rents, remain higher than before the pandemic. This maintains pressure on employers to raise pay to help workers cope with the higher cost of living.”

Data from the Office of National Statistics showed British pay growth cooled in the three months to July to a 5.1% rate, the lowest in over two years.

The BoE, expected to hold interest rates at 5% on September 19, is closely monitoring wage growth and predicts private-sector pay will taper to 5% later this year and 3% by late 2025.

The IDR analysis is based on 39 pay deals covering over 700,000 employees effective between May 1 and July 31.