UK employers plan smaller pay rises in 2024

  • Business Advice
Pay settlements set to fall for rest of 2024
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Peninsula Team, Peninsula Team

(Last updated )

According to the latest Labour Market Outlook, produced by the Chartered Institute of Personnel and Development (CIPD), employers’ basic pay increase expectations over the next 12 months have fallen for the first time since spring 2020.

Having held steady at 5% for more than a year, UK employers’ expected basic pay increases for the year ahead have fallen to 4%, the CIPD has reported.

Its report also shows that fewer employers expect their workforce to grow than in previous quarters. Overall, a third (33%) of employers plan to increase their total staff level over the next three months while 10% plan to decrease their overall staffing levels.

However, many employers (38%) continue to report hard-to-fill vacancies and one in five respondents (21%) expect significant problems filling roles over the next six months.

Senior Labour Market Economist for the CIPD, Jon Boys, said: “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.”

To see a sustained return to growth, he continued, there needs to be a real focus on boosting productivity by investing in workplace skills and technology.

If firms are planning to reduce base pay increases, Mr Boys suggested that it would be in their interest to highlight their wider benefits package and to improve job quality.

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