The UK labour market remains buoyant, however basic pay award expectations for the next 12 months persist at just 1%.
Findings from the Chartered Institute of Personnel and Development’s (CIPD) and The Adecco Group’s latest Labour Market Outlook revealed that, although employment demands will increase in the third quarter of 2017, a range of issues are preventing wage growth.
In the private sector, almost a quarter of firms reported the delivering of the National Living Wage as a brake on pay growth, while a further 21% cited auto-enrolment as a challenge. In the public sector, around three quarters of employers said that restraint in the public sector is the main reason they cannot match the inflation rate target of 2%.
Gerwyn Davies, Senior Labour Market Analyst for the CIPD, said: ‘The facts remain that productivity levels are stagnant, public sector pay increases remain modest while wage costs and uncertainty over access to the European market have increased for some employers.’
Davies added that the state of employment was good news, especially for jobseekers, who have recently been able to move work more quickly than in the past. However, he warned that against a backdrop of future migration restrictions and a tight labour market, the need for a workforce development plan was greater than ever.
Alex Fleming, President of General Staffing, The Adecco Group UK&I, agreed: ‘Continued subdued wage growth is a real issue that employers need to tackle head on. Employers must invest in staff to increase productivity, thus in-turn providing them with the opportunity to increase wage growth.’
