UK employers plan biggest pay hike in 11 years: Survey
An ever-growing inflation is biting Britain hard and the gloom is all-pervading. Still, a survey offers a glimmer of hope to the tight labour market.
British employers expect to raise wages for their staff by the most in at least 11 years but the 5 per cent pay deals for workers would still fall well below expected inflation, according to a study.
Businesses are currently facing multiple external shocks, from global supply chain disruption, to rampant inflation, and rising interest rates. Labour shortages are yet another issue weighing down on business confidence.
Amid the backdrop of the Bank of England's (BOE) fears of a further surge in inflation and measures to tame it if pay deals keep rising, the Chartered Institute of Personnel Development (CIPD) said that 55 per cent of recruiters planned to lift base or variable pay this year as they struggle to hire and retain staff in Britain’s tight labour market.
Expected median annual pay awards in 2023 rose to 5 per cent – the highest since CIPD records began in 2012 – from 4 per cent in the previous three months.
According to the study, more than half of respondents reported having problems filling vacancies, and nearly one in three expected similar issues in the next six months.
“Skills and labour remain scarce in the face of a labour market which continues to be surprisingly buoyant given the economic backdrop of rising inflation and the associated cost-of-living crisis,” Jon Boys, senior labour market economist at the CIPD, said.
The survey also showed the gap between public and private employers’ wage expectations widened. Planned pay settlements in the public sector fell to 2 per cent from 3 per cent in the quarter before, compared to 5 per cent in the private sector, the CIPD noted.
“It’s positive to see many employers taking steps to tackle skills shortages by upskilling existing staff and hiring apprentices. However, the UK Government could provide much-needed support by making the Apprenticeship Levy more flexible, to boost employer investment in training and reverse the decline in apprenticeship starts we’ve seen in recent years," Jon added.