Interest rate rise highlights need to rein in wage costs

Today’s
interest rate rise underlines the challenge to employers to keep a tight rein
on wage costs, according to John Philpott, chief economist at the Chartered
Institute of Personnel and Development (CIPD).

He
said: "Today’s quarter-point interest rate rise is understandable and
justified in light of the need to maintain economic stability.

"The
gradually mounting inflationary pressure that led to the Monetary Policy
Committees decision underlines the need for managers in the private and public
sector to keep a tight reign on wage costs as the jobs market gets ever
tighter.

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"Recent
CIPD surveys of employers have shown rising fears of upwards pressure on wages
caused by low unemployment, skills shortages and rising demand for new
staff."

By Quentin Reade