UK employers plan to increase pay by 5% this year and are increasingly making counteroffers to retain existing staff, according to the representative body for human resource (HR) workers. Show Basic pay will increase by a median of 5% over the next 12 months, a report from the Chartered Institute of Personnel and Development (CIPD) said. In response to staff being offered higher wages by rival organisations, 40% of UK employers have made a counteroffer in the past year, the CIPD labour market outlook said. Of those giving counteroffers, 38% of employers matched the salary of the new job offer while 40% offered even higher sums. But nearly a third of employers believed counteroffers were ineffective at holding on to staff. Public sector pay is expected to rise by 4%, the highest recorded by the CIPD's survey. However the survey of 2,000 employers took place before a pay rise of about 6% was offered to millions of UK public sector workers. Read more: Bosses hesitant to hire amid weak economic outlook, survey finds Stores 'named and shamed' for failing to pay staff minimum wage More on Wages
Please use Chrome browser for a more accessible video player Bank of England's Governor Andrew Bailey has told Sky News that the UK cannot continue to have the current level of wage increases The same 5% pay rise forecast was made by the same survey in the past two quarters and echoes Bank of England expectations. Such anticipated rises adds to inflationary concerns. The governor of the Bank of England had previously said: "We cannot continue to have the current level of wage increases. "We can't have companies seeking to rebuild profit margins which means prices continue to go up at their current rates... the current levels, I'll be honest, are unsustainable". Official figures showed from May to June and data up to July will be released by the Office of National Statistics on Tuesday. The rate of wage rises still fell below the rate of inflation meaning an effective pay cut for most UK workers. UK employers expect to give workers pay rises of 5% this year, the highest in at least a decade, according to a survey of more than 2,000 businesses. Against a backdrop of worker shortages, more than half of employers said they expect to raise base or variable pay further in 2023 to better recruit and retain staff, according to the Chartered Institute of Personnel and Development (CIPD), a body representing employers. However, expectations for public sector pay rises are lower. The 5% pay rise expectation was the highest since at least 2012, when the quarterly survey started, the CIPD said. However, 5% would not be enough to prevent a steep real-terms pay cut, with inflation more than double that at 10.5% in December. Employers are also coming under pressure to help workers with the cost of living crisis. Low unemployment has coincided with a period of sustained high inflation prompted by supply chain disruptions and energy price rises, which have been worsened in the last year by Russia’s full-scale invasion of Ukraine. The UK economy narrowly avoided a technical recession at the end of 2022 as output stayed almost unchanged. However, despite the relative weakness in activity, unemployment remained near record low levels at 3.7% in November, a level that historically has been associated with a tight labour market and pay increases. Jon Boys, a senior labour market economist for the CIPD, said: “Skills and labour remain scarce in the face of a labour market which continues to be surprisingly buoyant given the economic backdrop of rising inflation and the associated cost of living crisis.” The survey showed a significant disparity between stronger pay expectations of 5% in the private sector and only 2% in the public sector. The gap helps to explain the wave of strike action taken by public sector workers and those whose pay is influenced by the government, the CIPD said. Nurses, rail workers, ambulance drivers, teachers and civil servants have all gone on strike this month alone. Workers represented by the Public and Commercial Services Union at the British Museum and the Driver and Vehicle Licensing Agency were on strike on Monday. Public sector workers have suffered much larger drops in real pay (taking into account the effects of inflation) compared with their counterparts in the private sector. The gap between public and private sector pay growth remained close to record-high levels in November, the most recent month for which government pay data is available, according to the Resolution Foundation, a thinktank. Real wages declined by 5.5% in the public sector compared with 1.9% in the private sector. after newsletter promotion The CIPD also reported that employers were struggling to fill vacancies. That is generally another sign of a tight labour market that would ordinarily prompt employers to raise pay offers. Fifty-seven per cent of employers said they have hard-to-fill vacancies, and of those, two in five said they would raise wages this year to attract workers. Is a 25% raise too much to ask for?Malia Mason and Dr. Daniel Ames found that a useful technique is to offer a range of options, rather than one fixed amount. They also found that asking for between 5% and 25% pay increases yielded the most successful negotiations. What pay rise should I expect 2023 UK?In real terms, UK salaries fell by 1.3% less than the 4% drop forecasted for 2023 (-2.7%). This is a result of lower than expected inflation of 7.7% compared to the 9% forecasted, while UK businesses implemented a 5% average nominal salary increase – the highest since ECA's survey began 23 years ago. Is a 10% raise too much?According to Investopedia, the amount you seek in a raise should reflect your tenure with your employer and your role within the company. Aiming for a 10% to 20% increase from your current salary is generally seen as a good, reasonable starting point. What is the average salary increase rate in the UK?Average weekly earnings across the whole of the economy grew by 7.8% on the regular pay measure in the year to June 2023. This is the highest rate of growth since comparable records began in 2001. Total pay, which includes bonuses, rose by 8.2%, boosted by one-off payments paid in the NHS. |
