UK employees can expect lower salary increases as employers reduce hiring plans for 2024, with a widening wage gap seen between private and public sector workers.
Employees in the UK may be looking at a drop in salary increases this year as employers cut back on their hiring plans, according to a new report from the Chartered Institute of Personnel and Development (CIPD).
The findings come from a survey conducted last month, involving 2,006 employers and focusing on their approaches to pay, staffing levels, and job vacancies.
After staying at 5% for some time, expected basic pay rises have dropped to 4%, marking the first fall since the beginning of the Covid-19 pandemic.
Within the private sector, the average expected basic pay increase was down from 5% to 4% on the last quarter while, in the public sector, expectations fell further from 5% to 3%.
“We’ve seen a sustained period of high wage growth in response to a tight labour market, and high inflation pushing up the cost-of-living. Pay growth has helped individuals but it leaves employers with a higher wage bill to cover,” said CIPD senior labour market economist Jon Boys.
“To see a sustained return to growth, there needs to be a real focus on boosting productivity by investing in workplace skills and technology.”
As far as staffing levels are concerned, the picture is different between the public and private sector. A third (33%) of employers in the private sector plan to increase their total staffing level over the next three months while one in 10 (10%) plans to cut overall staffing levels.
However, in the public sector, nearly one in five (18%) of employers is planning to cut staffing levels over the same period.
A significant number of employers (38%) are still finding it hard to fill job vacancies, with one in every five expecting notable difficulties in filling roles over the next six months.
“This feels like a key moment in the UK labour market,” explained Boys. “The public and private sector gap in pay expectations is widening again, at a time of mounting pressures on public services.
“Investing in skills and training, people management and productivity gains will be fundamental in helping organisations to become future-proof and better able to weather economic headwinds when they come.”