British companies are planning record pay increase

A decade-high pay increase is planned in Great Britain. The upcoming pay rises are aimed at filling positions, while at the same time, real-term growth of wages is projected to be slower than the pace of inflation.

According to the quarterly survey conducted by the Chartered Institute of Personnel and Development (CIPD), British employers are suggesting an average raise of basic pay rates by 4% next year. There’s an even higher raise by 5% expected in the private sector. Thus, the planned pay hikes will be the most significant since 2012.

Nevertheless, as it was pointed out by Jon Boys, CIPD labor market economist, the price growth would still be faster despite pay hikes hitting record highs. It’s suggested that most employers would not only miss the benefits of higher wages, but would actually have to deal with a real-terms pay reduction.

This data give more reasons for the Bank of England to be concerned about overheating of the labor market and fast wage growth, as it might spur further inflation. The current inflation level is already a 40-year-record 10.1%.

According to the information provided by CIPD, a jobs boom in Great Britain hasn’t reached its peak volumes yet, because 69% of employers are expecting to hire more employees next quarter.

At the same time, pay rises are becoming a less frequent practice to solve difficulties with filling positions. Only 24% of recruiters consider this as an option when faced with a shortage of workers, while in the previous six months 44% of employers were ready to do it.

As an alternative to the mentioned option, 47% of recruiters who struggled with labor shortages have tried to train up their already hired employees.

It’s also necessary to mention that about 12% of employers admitted they provided all of their staff with a one-off payment to compensate for the growing cost of living, while another 10% noted they offered it to some of their employees.

As it was said by Boys, organizations and companies are now searching for optimal solutions to support their workers, while facing high operational costs and a tight labor market.