But, overall the economy is strengthening. GDP (which attempts to capture the state of the economy in one number) increased in the first quarter of this year (although even after ONS had done a second take on the data, it still remained “disappointingly unrevised” from the initial 0.3% estimate). Employment continues to rise and unemployment continues to fall. Comparing February to April 2015 with a year earlier, pay for employees in Great Britain increased by 2.7% (both including and excluding bonuses), putting the gap between wage growth and inflation at its widest in eight years.
So, the economy is on the up (although the bounce back has been pitifiully slow), but pay awards are not. The latest statistics and surveys show that pay awards are sticking to 2% like a magnet – that’s not to say they’re all 2%, but they’re certainly congregating around it. The latest XpertHR figures show that the median pay award was stuck at 2% for a 13th consecutive rolling quarter. The latest CIPD median expected pay settlement is 1.8% (to put this in context, in Spring 2008 – so pre-recession – the CIPD average pay increase forecast was 3.6%, so double what it is now). This means that pay awards are ahead of inflation, but this is due to falling inflation and not rising pay awards.
If you’re in the social housing, homelessness or care sectors (as a lot of our clients are) what does all of this mean for you and what challenges are you likely to be up against this year?
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