Pay growth momentum slowing among UK employers – survey

FILE PHOTO: A lorry driver passes a sign on the side of his vehicle advertising for jobs as he makes a delivery, in London, Britain, October 13, 2021. REUTERS/Toby Melville

LONDON (Reuters) – British employers expect to raise staff pay by 3%, a big increase by normal standards but far below the current rate of inflation, and there are signs of weaker wage momentum ahead, a survey published on Monday showed.

The Chartered Institute of Personnel and Development (CIPD) said recruitment intentions remained strong across all sectors with almost two thirds of respondents in its survey expecting problems in filling vacancies over the next six months.

Over the past six months, 44% of employers responded to the shortage of candidates by increasing pay but only 27% planned to do so in the future, the CIPD said.

“Our research … suggests that employers are running out of steam on their ability to increase pay any further, so they’re switching their focus to retention and keeping their existing workforce happy,” Jonathan Boys, a CIPD economist, said.

With inflation at 7% and on course to hit 10% later this year, the Bank of England is watching pay deals closely to gauge the risk of the recent jump in prices becoming a longer-term problem for the economy.

The planned 3% pay increases were the joint highest since the CIPD began its current series of surveys in 2013, matching the level in the previous quarter.

The CIPD surveyed 2,023 employers between March 22 and April 18.

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