Pay rises agreed by British employers have fallen to their lowest level in almost a year, adding to growing evidence that the UK labour market is losing momentum.
The median pay settlement dropped to 3.2% in the three months to the end of July, down from 3.3% in each of the previous three rolling quarters, according to figures from human resources data provider Brightmine.
The latest figures point to a more cautious approach among employers as businesses contend with a softer employment market and continuing pressure on costs.
Sheila Attwood, Brightmine’s HR insights and data lead, said the fact that more than a third of comparable pay awards were lower than a year earlier indicated that some employers were beginning to rein in wage growth.
The survey found that 71% of pay settlements fell between 2% and 3.99%, with 3% emerging as the most common individual award.
There was also a clear shift in the direction of pay decisions. Around 35% of settlements were lower than the previous year for the same employee groups, while a further 35% were unchanged. Only 30% resulted in higher awards.
Brightmine based its findings on 36 pay settlements implemented between May 1 and July 31, covering approximately 762,000 employees across the UK.
The figures come as separate official data showed the British jobs market weakened slightly again during the second quarter, reinforcing signs that employers are becoming more restrained in hiring and remuneration decisions.
The slowdown in wage settlements will be closely watched by policymakers as the Bank of England weighs the balance between easing inflationary pressures and the risk that a weaker labour market could further undermine economic growth.
For employees, however, the latest figures suggest that the period of relatively strong wage bargaining may be beginning to lose some of its momentum. While pay awards remain above the rate of inflation in some cases, the growing number of employers offering smaller increases points to a more cautious phase for Britain's labour market.
