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Negotiators have responded to soaring inflation with a level of pay settlements not seen for many years.

However you measure it, the last 18 months have seen the cost of living soar, eating into wages and salaries. But pay negotiators responded, including through the use (or threatened use) of industrial action, helped by a tight labour market with over a million vacancies.

In the 2021-22 pay round, they doubled the value of a typical pay deal from 2% to 4.2%. But in the 2022-23 pay round so far (based on 281 deals effective between August and March) the settlement level has jumped again.

Typical (median) pay deals have hit between 6% and 7.2%. One in four have been worth 10% or more on lowest basic rates. Most are still falling short of inflation — currently running at 13.8% RPI (retail prices index) and 10.4% CPI (consumer prices index) — but it is still a huge achievement.

The balance of industrial action has swung towards the public sector, but last year it was chiefly in the private sector, helping to drive some of these results. Staff at the Shelter housing charity got 7% plus £1,250 after striking in December, for example, while Sunderland Stagecoach bus workers got 11% plus £150 after ending their dispute.

Luton Airport workers won pay increases totalling 19% and a £500 retention bonus after calling off a strike. Veolia waste workers did the same and got 10% backdated, plus 8.4% for 2023-24 (with a £375 one-off for the lowest paid).

How widely are deals like this being done, and what is the big picture emerging in the 2022-23 pay round, based on what we know so far?

Most of the deals in the Workplace Report survey (83%) are in the private sector. Here are some of the key overall trends:

Over half of the deals in the survey (157, 56%) had at least two stages, some as many as five or six. Just under half of those were the kind of deals that accumulate over less than two years (73 or 26%). Just over half were long-term, multi-year agreements where each stage is, in effect, a pre-agreed annual pay rise (84/30%).

The number of staged deals was boosted by employers coming back to an existing deal to “top it up”. At wholesaler Booker Makro, for example, an additional 25pph increase was applied to the standard rate. Marks and Spencer paid out an additional 2%, Tesco an additional 20pph, and Wilko an additional 40pph (worth up to 4.2% for all level 1 and 2 staff).

But, with inflation rising so quickly, deals that were newly-negotiated had a better chance of keeping up than those that were negotiated some time in the past.

Half of the deals in the survey were either straightforward new pay deals or at the start of a series of staged pay rises, with median increases of 7.2% on lowest basic rates, 6.5% standard increase.

For the rest, the latest pay increase was the second, third or fourth since their settlement came into effect. Overall, the level of pay rises among these agreements was not that different (7% on lowest basic rates, 6% as the standard increase). But the length of time since they were negotiated has made a difference:

Those lucky enough to have had an inflation link in place when their 2022-23 pay deal fell due have done well, but that was the case for only one in 20 settlements.

The following agreements are linked either to RPI or CPI or, in one case, both:

This is an edited version of an article that appears in the April 2023 issue of Workplace Report. The full article includes details of a number of deals by industry and flat rate pay deals, as well as looking at how pay structures have played a part in boosting pay.