Around one-quarter of private sector employers are under some or significant pressure to raise wages, according to findings from the Chartered Institute of Personnel and Development (CIPD) and The Adecco Group.
The latest Labour Market Outlook showed that, despite minimal pressure on private sector employers to increase pay, 59 per cent of public sector organisations said they were under some or significant pressure to raise wages for the majority of the workforce. The CIPD believes that this finding can be partly attributed to the recent debate around the public sector pay cap.
The research showed that, in the private sector, the most common reason for a lack of pay pressure, cited by 23 per cent of employers, was a recognition among workers that business cannot afford more generous wages, underlining the productivity challenge many firms face.
‘This survey provides further evidence that productivity has a far more significant bearing on pay growth than the tightness of the labour market,’ said Gerwyn Davies, CIPD Senior Labour Market Analyst. ‘Over time we might expect low unemployment levels to lead to increased pressure on pay, as the Bank of England has predicted. However, it’s the UK’s ongoing poor productivity growth that’s currently preventing employers from paying more, not their inability to find or retain staff.’
Overall, median basic pay increase expectations for the year ahead stood at 2 per cent. This is in line with wage growth data which shows that basic wage growth has settled at between 1.8 per cent and 2.2 per cent over the past six months.
