Why pay hikes aren’t keeping up with the cost‑of‑living roller coaster
Recent numbers from XpertHR have shown that the median pay headline for the last three months of January 2024 is 5.1%—a drop from the 6% seen the previous quarter. That may feel like a small dip to some, but it’s actually great news for budgets that were hemorrhaging a chunk of cash earlier in the year.
Inflation is on the mend, but the pay rise has gone on a different street
When you look at the Consumer Prices Index, inflation has slashed from a staggering 10.1% in January 2023 down to a respectable 4% a year later. Once a normal rule of thumb was that pay bumps should mirror that trend, XpertHR data already tells us a different story: roughly half of all pay settlements were smaller than last year’s awards.
Quotes from the data guru, Sheila Attwood
- “We’re starting to see that about half of employee groups are getting settlements less than their previous year’s award,” she says. “Those big 6% raises in 2023 were designed to tackle the soaring cost of living that hit the UK hard at the end of last year.”
- “Still, the median is high compared to historic standards—no blanket payouts at this level since 1991,” Attwood adds.
- She points out that one in five reviews still lands at 7% or more—so inflation‑busting deals are still being decided, but overall headlining numbers now sit above both RPI and CPI inflation rates.
- “The skyrocket in 2023 pay budgets means companies are now tightening the purse string for 2024,” Attwood counters. “I’ve already seen a 5% media pay settlement kick in this January, slightly below our current rolling quarter headline.”
Takeaway for the finance folks
In plain English: The cost‑of‑living crisis has finally taken a breather. Companies are being a bit more realistic, giving smaller rises rather than a blanket 6% boost. The topic of pay is still hot—after all, work and a decent living wage don’t magically appear at the cost of an inflated economy. But now, pay leaders are feeling the pinch and bringing checks and balances back to the table.
So the rumor that pay will keep spiralling in 2024 is not true. In fact, the future is looking more balanced, a win for both employees and the organisations that support them.
