Learning and Development News

Pay rises likely to remain modest

By Sue Mennell (14-05-2007)
0 Comments Comments
Article Rating:

Poor Best

Email to a friend | Print Version

Learning and Development News - Pay rises likely to remain modest

The latest quarterly CIPD/KPMG Labour Market Outlook survey is published today, 14 May.  Findings include:

Recruitment / labour market confidence:

  • 85% of employers say they’ll be recruiting in the current quarter, compared to 82% in winter 2006/07 and 79% in autumn 2006.
  • The proportion of employers who say recruitment will lead to a net increase in headcount has fallen to 39%.
  • The proportion of employers anticipating recruitment difficulties in the current quarter is 48% (up from 46% in the previous quarter and 44% in autumn 2006).
  • 22% more employers expect to employ more staff than those who expect to employ fewer in a year’s time.  In previous surveys the balance ranged from 13-17% in the previous three quarterly surveys.  By contrast, the public sector records a significant negative balance (-20%).

Pay outlook:

  • Of the 40% of employers planning a pay review in the current quarter, more than a third (36%) expect pay to rise in their organisation by 3-3.5%.
  • 23% of employers expecting pay to rise by 4% or more, compared with only 13% last quarter.  However, the median expected increase remains steady at 3% (a figure that is consistent for all but the public sector where the expected increase is 2.5%).

Dr John Philpott, Chief Economist at the Chartered Institute of Personnel and Development (CIPD), said:
“Substantial growth in the supply of labour in recent years, due mainly to increased immigration, has helped the economy avoid the wage spiral some had feared in the wake of the recent surge in the cost of living. But although this risk may subside in the coming months as the rate of price inflation moderates, a new threat is emerging in the shape of increased recruitment difficulties.  This is particularly true of job vacancies requiring the kinds of skill or experience which migrants aren’t always able to supply.
 
“When it comes to the outlook for pay inflation, a combination of greater employer optimism, increased recruitment activity and mounting recruitment difficulties may soon become a bigger concern to the Monetary Policy Committee than any possible knock-on effects of recent higher inflation.  This could have a significant bearing on how much further interest rates will have to rise.”     

 

Back to top | Latest news

 

Readers Comment

Comment on this story here >

Be the first to comment on this news story