LONDON (Reuters) - British employers appear to be settling on a new, higher benchmark for annual pay awards for staff in the run-up to April, the most important month of the year for new pay deals, wage analysis firm XpertHR said on Thursday.
Pay deals in the first three months of 2018 averaged 2.5 percent, the joint-highest since 2008, and have exceeded a previous 2 percent median for the longest unbroken period since 2012.
“We are now seeing a definite upturn in the level of pay awards made by employers. And early indications from some April pay awards - the busiest month in the pay-setting calendar - are that 2.5 percent will become the benchmark pay award for 2018,” XpertHR pay and benefits editor Sheila Attwood said.
The Bank of England has said it expects wage growth to hit an annual 3 percent by the end of 2018 after the unemployment rate fell to its lowest since 1975.
Stronger domestic inflation pressure from an expected increase in wage growth is the main factor behind the BoE’s intention to slowly raise interest rates over the next three years.
XpertHR said there were other signs that the higher rate of pay awards would continue, including the fact that the middle half of all pay awards were worth between 2 and 3 percent, up from 1.5-2.3 percent range in the same period a year ago.
Official data published last week showed Britain’s headline wage gauge rose by less than expected, but a measure of underlying pay, which excludes volatile bonus payments, continued to grow.
Reporting by William Schomberg, editing by David Milliken