Chancellor George Osborne warned last week that the UK faces a ‘cocktail’ of threats from a slowing global economy, something that is likely to have a knock-on effect on the British public – recent figures have confirmed that pay increases are likely to drop in 2016.

A recent payroll survey by reward consultants Paydata has revealed that employers setting their 2016 budget will offer few – if any – pay increases to staff this year. Contributing factors include the influence of inflation, CPI sitting at zero and RPI sticking at one percent, but also a new and more controversial issue raised by businesses – the introduction of Gender Pay Gap Reporting due to be implemented in April. Employers feel that they need to address any potential equal pay concerns before they reward pay increases.

Whilst the trend over the years has been for businesses to pay individually determined increases rather than an across-the-board bonus to all staff, the new legislation puts the current system on stand-by until companies are equipped with guidelines on pay rewards by the government. Like previous industry trends, sectors will vary in their pay increases; Professional Associations and Institutes pay marginally below the overall figures, and those located in London will generally increase due to recruitment and retention pressures.

A number of commentators, including the CBI, predicted last year that inflation would increase this year towards the governments two percent target, however these forecasts now need to be reviewed as it’s estimated that wage inflation will not pick up. Further reward surveys are expected to be released in the Spring, which could reveal some interesting details on the adoption of equal pay reporting.


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