Looking at the figures in August, there looks to be a steep rise in pay levels in the private sector, but in reality, this is on a par with incremental increases to the pre-pandemic levels of pay. The average earnings went up in the public sector due to an upward lift in government spend in March 2020 as the pandemic unfolded and before lockdown was implemented. Whilst healthcare, residential care and housing associations which are all intertwined with the public sector show a dip this year, this may reflect the generous pay levels ahead of the pandemic’s effects being felt by employers. This delayed effect is the opposite experienced by the private sector which is now seeing an uplift in pay to rectify a year of pay freezes for 24 per cent of respondents to our UK Reward Management Survey in autumn 2020. To ensure pay packages are competitive, we recommend getting up to date data on pay. Pay benchmarking can help you stress test your pay levels for the year using the latest market intelligence.
2. Look ahead to 2022 pay trends
When looking at pay predictions for 2022, our research highlights higher levels of confidence from businesses, with the easing of restrictions giving businesses more clarity over the next 12 months. With certain businesses having more confidence about operating in spite of a lockdown, this gives some sectors more assurance that they are prepared for this winter. Professional services sectors can make contingency plans for the worst-case scenario, aside from retail and hospitality. Pay levels are recovering to pre-pandemic levels, but this comes with a caveat. Employers who granted more generous pay levels in 2020 are generally more constrained in their official pay figures for this year and vice-versa, so it is important to access the most up to date pay figures in a volatile labour market.
“2022 pay review predictions are currently a carbon copy of those seen in 2019 before the outbreak of Coronavirus, with a significant proportion of 2.5 and three per cent predicted increases."
The uncertainty around the impact on pay levels in 2022 persists. The private sector has made greater use of furlough, reduced hours and pay cuts to weather the pandemic, so are recovering from the huge dip in pay levels; as a result accurate projections of pay are still early. Employers should approach setting pay levels with caution and try to ground this in benchmarked figures. Two per cent is the most common projection, reflecting the two per cent average of 2021 after a fairly consistent three per cent level before the pandemic. 2022 pay review predictions are currently a carbon copy of those seen in 2019 before the outbreak of Coronavirus, with a significant proportion of 2.5 and three per cent predicted increases. Combined with inflation set to reach a decade high of three per cent, employers may have to match this to ensure they are paying objectively fairly.