Private sector pay set for growth as skills shortage bites
Private sector pay is set to increase 2.5 per cent as skills shortages put pressure on employers.
A survey by the Chartered Institute of Personnel and Development and the Adecco Group of pay and recruitment intentions at 1,254 employers in the first quarter of 2019 showed basic pay expectations in the private sector have increased from two to 2.5 per cent – the highest figures since the survey began in 2012.
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The skills shortage is putting upwards pressure on wages, with two thirds of private sector firms boosting salaries in response to recruitment challenges, up from 56 per cent in the previous quarter.
The survey showed employers’ pay intentions remained steady overall at two per cent. With current inflation forecasts currently below two per cent, that would mean a real terms pay rise for many in 2019.
The net employment balance – a measure of the difference between employers who expected to increase staff levels and those who expected to decrease them – has fallen to +20, continuing a downward trend from a high of +26 in summer 2018.
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Alex Fleming, UK and Ireland head of staffing at Adecco, said: “Employers seem to be adapting to the idea that a skills-short market is a fact of life, and they are getting on with things regardless.”
Next week, the Office for National Statistics is set to issue its latest labour market report for the three months ended December, with Howard Archer of EY Item Club predicting that employment growth could slow after two strong months of growth.
Archer predicted employment growth of about 125,000, down from the three months ended November when employment increased by 141,000 to 32.53m to reach a record employment rate of 75.8 per cent.
“There could well have been a slowing in the labour market in December – the economy was losing momentum at the end of last year and Brexit uncertainties were picking up,” Archer said.