Monitoring Desk
ISLAMABAD/LONDON: UK employers expect to raise wages for their employees by the most in at least 11 years, but the 5% pay increases would still fall well short of expected inflation, according to a survey released on Monday.
The Chartered Institute of Personnel Development (CIPD) reported that 55% of recruiters planned to raise base or variable pay this year as they struggled to hire and retain staff in Britain’s tight labor market, despite the Bank of England’s concern that the surge in inflation would be harder to tame if pay packages continued to rise.
From 4% in the previous three months, the expected median annual pay awards in 2023 increased to 5%, the highest since CIPD records began in 2012. More than half of respondents reported difficulty filling vacancies, and nearly one-third predicted similar difficulties in the next six months.
UK labour remains scarce
According to Jon Boys, senior labour market economist at the CIPD, skills and labour remain scarce in the face of a labour market that remains surprisingly buoyant in the face of rising inflation and the associated cost-of-living crisis.
The survey also revealed that the pay gap between public and private employers has widened. The CIPD reported that planned pay settlements in the public sector fell to 2% from 3% the previous quarter, compared to 5% in the private sector.
The results highlighted the squeeze on living standards as key workers such as nurses, teachers, and public transportation workers go on strike over pay and working conditions.
Despite signs that the recent surge in inflation has peaked, Bank of England Governor Andrew Bailey expressed concerns about wage-setting last week. After reaching a 41-year high of 11.1% in October, annual inflation fell to 10.5% in December. Despite the Bank of England raising interest rates to their highest level since 2008 this month, Bailey indicated that inflationary pressures remained a concern.
According to the quarterly survey, recruiters are more willing to hire people who are returning to the workforce, including older workers and those with health issues. The CIPD polled 2,012 employers between January 3 and January 25.
