UK companies plan biggest pay rises since 2012 amid staff shortages

By Suban Abdulla

LONDON, Feb 13 (Reuters) – British employers have been planning to raise their staff’s wages to the maximum for at least 11 years, but 5% wage deals for workers would remain well below expected inflation, according to a poll released on Monday.

Fearing on the part of the Bank of England that rising inflation will become more difficult to control if wage settlements continue to rise, the Chartered Institute of Personnel Development (CIPD) has said that 55% of companies plan to raise base or variable pay this year as they both struggle to recruit and retain staff in the UK labor shortage market.

The median annual salary forecast for 2023 rose to 5%, the highest since the CIPD began recording data in 2012, from 4% in the previous three months.

More than half of respondents said they are struggling to fill vacancies, and nearly one in three anticipate similar problems in the next six months.

“Skills and labor remain in short supply in the face of a labor market that remains surprisingly buoyant given the economic backdrop of rising inflation and the associated cost of living crisis,” said Jon Boys, Labor Market Economist at the CIPD.

The survey also showed that the gap between public and private employers’ salary expectations had widened. According to the CIPD, expected wage settlements in the public sector fell from 3% in the previous quarter to 2%, compared to 5% in the private sector.

The findings highlight falling living standards at a time when essential workers such as nurses, teachers and public transport staff stage a series of strikes over wages and working conditions.

Last week, Bank of England Governor Andrew Bailey expressed concern over wage setting, despite signs that the rebound in inflation has reversed.

Annual inflation fell to 10.5% in December, after reaching its highest level in 41 years (11.1%) in October. Bailey noted that inflationary pressures remain a concern, despite the Bank of England raising interest rates this month to the highest level since 2008.

The quarterly survey showed employers are more willing to hire people re-entering the workforce, including older workers and those with health conditions.

The CIPD interviewed 2,012 business people between January 3 and 25.

(Suban Abdulla in London; edited in Spanish by Flora Gómez)