UK companies plan to raise their salaries as much as possible since 2012 – CIPD

LONDON (Reuters) – British companies plan to raise base salaries in at least seven years because of recruitment difficulties and the need to keep wages aligned with their rivals, a survey said Monday. persistent strength of the British labor market.

The Chartered Institute of Personnel and Development (CIPD), a professional human resources organization, said private sector employers plan to raise basic pay rates by 2.5 percent on average this year, a record since the survey launched in 2012.

The UK labor market held up well on the eve of Brexit, with unemployment hitting its lowest level since the mid-1970s, despite a more generalized slowdown that caused a shift in investment and a reduction in overall growth. in 2018, which was at its lowest since 2012.

The head of the Bank of England, Gertjan Vlieghe, said last week that companies could choose to expand by hiring staff rather than buying new equipment because after a Brexit without a potential deal it would be easier to fire workers than to sell unwanted material.

Official data on expected wages on Tuesday – which, unlike the ICPD figures, also include increases in promotions and job changes – should show that wages have risen to their highest level since 2008, rising 3.5% compared to the fourth quarter of 2018, according to a Reuters poll.

Inflation was the main reason cited by companies for the CIPD to expect wage increases above 2%, which raises the question of whether this increase will be maintained while inflation has fallen below from this level.

Recruitment and retention issues, as well as ongoing pay rate increases elsewhere were also the main reasons why the increase in wages was above 2%.

Wage growth has been weak in the long run, with wages still lower on the eve of the financial crisis more than a decade ago.

The ICPD has attributed this to stagnant productivity.

"The productivity is 22% lower than it would have been if the pre-financial crisis had continued. As a result, wage growth is terribly late, "said Jon Boys, an economist at the ICPD.

Public sector workers will not see their wages rise as quickly as their private sector counterparts.

The ICPD has stated that public sector employers expect a rise in average wages to fall back to 1.1% this year, after a temporary increase of 2%, reflecting a more generous facility for hospital workers and some other staff.

As a result, the overall wage settlement for employers across the economy remained unchanged at 2%.