Trends and predictions

The past year saw private sector pay rises of around 2%, less in the public and voluntary sectors. According to the Bank of England, wages increased by 2.2% more than inflation in the first quarter of 2015. But while pay is beginning to catch up with cost of living, this is against the background of a fall in average weekly earnings since 2009 of between 7% (measured by CPI) and 11% (by RPI).

As CIPD points out in its Employee Outlook 2015, not everyone got a salary increase in 2014, and not everyone expects to get a rise in 2015. CIPD also points to a ‘tale of two workforces’ wherein more than a third of organisations froze basic pay in the year to March 2015, while 41% gave a basic award of at least 2%.

More employees received a pay rise in 2014 than the year before, but this proportion – 53% – is below the 67% recorded in 2008 as the recession began. Among those whose pay did not increase last year, 38% reported that it had not changed since 2012. More employees (27%) reported a decline rather than an improvement (20%) in their living standards last year, and just 18% think their living standards will improve this year.

Against this background, CIPD says that 63% of employees expect a pay rise in 2015, anticipating a median increase of 2%, while the Bank of England’s May quarterly forecast predicted wages will rise 2.5% this year.