REC survey shows not everyone benefitted from pay inflation in 2023/24

Much is made of soaring pay inflation in the past 12 months, but a Recruitment and Employment Confederation (REC) survey of employers suggests many businesses were too hard pressed to even give their staff a pay rise in 2023/24.

REC commissioned Savanta to ask a sample of employers whether their organisation granted staff members a general pay award in 2023/2024, separate from individual bonuses or salary increases resulting from promotions. And, if so, what was the average percentage pay rise given to staff. 

The survey results show that half of the surveyed employers did not give pay rises in 2023/24: this breaks down as 41% public sector and 53% private sector. Small employers (0-49 staff) were the least likely to give pay rises. In fact, of those who responded to the survey to say they did give pay rises, it was mainly medium and large sized employers. This reflects small businesses’ struggles in trading as shown by the Federation of Small Businesses (FSB) research this week which revealed a 56,000 drop in the number of small businesses in the UK between early 2023 and early 2024, and a 0.5 per cent fall in the number of people employed in small businesses, from 16.7 million to 16.6 million. 

Shazia Ejaz, REC Director of Campaigns and Research, said: 

"Over the past year, we've seen a divide between pay winners and losers, as many businesses are squeezed by inflation and stagnant economic growth. Until we ignite economic growth, the number of winners on pay will remain limited. Clearly, not everyone is feeling the benefits of pay hikes, especially within the private sector and smaller companies. 

"Our survey highlights the economic volatility of the past 12 months, showing how certain industries are grappling with a slowdown in demand while labour shortages intensify competition for roles in specific sectors. Employers have had to get creative with non-salary perks to keep talent, but there's a limit to how much they can stretch. For businesses to invest in their people, they need renewed confidence - something that could come from further interest rate cuts and Autumn Budget reforms that unleash greater investment in their workforce." 

Notes to editors 

REC commissioned Savanta to interview a total of 169 employers by telephone in September 2024. These were employers in the private and public sector, different locations and different sizes. 

The survey shows that half of the overall surveyed employers did not give pay rises in 2023/24 (separate from any individual bonuses or salary increases resulting from promotions). This breaks down as 41% public sector and 53% private sector – with the overall 50.9% weighted to reflect that far more private sector employers were surveyed. 

A total of 35.8% of surveyed employers gave pay rises in 2023/24 (25.6% of public sector employers and 37.9% of private employers – with the overall percentage weighted to reflect that there was far more private sector employers surveyed). Medium and large sized employers were most likely to have given a pay rise.  

Of overall employers who responded that they did give pay rises, the most typical amount was between 4%-5.99% (29.8%) and a similar number, 28.8%, of them gave pay rises of 6% and higher. Pay rises of 0.1%-1.99% were given by 12.8% of respondents and an uplift in pay of around 2%-3.99% by 12.6% of organisations.  

The upper levels of pay rises in the survey are not too dissimilar to what the Office for National Statistics (ONS) has reported for the UK 2023/24. 

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Find out more about the Recruitment & Employment Confederation at www.rec.uk.com.