Your next big payrise isn’t due until 2020
Workers banking on a bumper pay boost might find themselves disappointed, as a report out today has found that payrises have ground to an almost halt and could stay that way for the rest of the decade.
A survey of more than 1,000 employers by the Chartered Institute of Personnel and Development (CIPD) discovered that pay awards will rise by just 1.7 per cent over the next year, marking the second time in a row the quarterly study has recorded a rise in pay less than government's two per cent inflation target.
"The UK is now in its eighth year of productivity go-slow which continues to limit the scope for employers to pay more and recruitment and retention problems have so far proved manageable without across-the-board pay rises," said Mark Beatson, CIPD chief economist. "This survey provides no indication of this situation changing any time soon."
In light of its findings, the professional body for the HR industry is calling on government to help drive up productivity, so that firms can afford to pay their workers more.
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The CIPD also pointed out the increased wage bill caused by the apprenticeship levy, pensions auto-enrolment and national living wage could be prevented employers from boosting salaries for other workers, and costs like these could keep creeping up until at least 2020.
Beatson added: "Simply making low-paid labour more expensive is not the answer and the government shouldn’t be surprised if some employers choose easier options, such as reducing hours, chipping away at other benefits or making a less generous pay award the next time pay is reviewed."
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The CIPD is also warning that some businesses, particularly smaller ones, may lack the know-how to increasing their productivity by themselves.
Beatson remarked: "The government needs to provide greater support and employers are going to have to be more and more creative in how they manage reward and motivate employees. Without productivity improvements, organisations will be forced to keep pay budgets under ever tighter control, which is why we believe the current jobs-rich, pay-poor environment is likely to continue as these increased costs to business take effect."
Productivity in the UK has been worryingly low for some time, with figures from the Office for National Statistics showing that it lags behind all of its G7 counterparts with the exception of Japan.