Employers predict stable pay rises over the next 12 months

Median pay deals have been stable in recent months despite economic uncertainty, with the average pay rise worth 2.5%, according to new research.

The study by Incomes Data Services (IDS), which investigated almost 50 settlements covering 580,000 workers, revealed employers are predicting similar rises in 2013.

Between July and September, a third of the awards were worth at least 3%, although this was lower than in the three months to August.

Ken Mulkearn of IDS said of the findings: "Many employers have had at least one eye on staff engagement and motivation, and as a result pay freezes are rare."

The expert added: "However, there's still a gap between inflation and many pay awards, leading to a continued squeeze on household incomes for large numbers of employees."

A separate report by XpertHR, which polled almost 250 employers across the UK, revealed similar findings.

It found that employers in the private sector are predicting that pay awards will be 2.5% over the next year, while those in manufacturing and production are anticipating a higher increase.

Sheila Attwood, a spokeswoman for XpertHR, said the predicted pay increase of 2.5% in the year ahead demonstrates "caution" on behalf of employers.

She added that companies will once again assess the performance of their business and their ability to pay staff before setting their pay award budgets.

However, people's wage expectations might be bolstered by the fact the UK climbed out of the double-dip recession last week.

The economy returned to growth at its fastest pace in five years between July and September as gross domestic product (GDP) grew by 1% - ending three consecutive quarters of declining output.

Experts in the City were only expecting a rise of 0.6%, so the actual figure - which is the biggest increase witnessed since the third quarter of 2007 - may raise the hopes of workers up and down the country that wages will begin to creep up faster in the months to come.

Copyright Press Association 2012