Most employers confident of keeping pay rises below 3.5%

The majority of employers expect to award staff pay rises of less than 3.5% in the winter pay round, a survey has found.

The latest quarterly Labour Market Outlook survey, by the Chartered Institute of Personnel and Development (CIPD) and professional services firm KPMG, found 58% of employers expect pay rises of less than 3.5%.

A third (32%) expect pay to rise on average by between 3% and 3.5%. Only 13% expect pay to rise on average by 4% or more, the study of 1,369 employers found.

One in four employers surveyed intend to recruit additional staff this quarter, although there is also an increase in the proportion of employers intending to make some staff redundant – up from 20% to 23% since the autumn survey.

The trend for job cuts is evident across all sectors of the economy, but especially in the public services where 30% of employers intend to make redundancies.

John Philpott, chief economist at the CIPD, said: “Conditions in the labour market look conducive to moderate pay settlements this winter, with enough willing workers – especially migrants – to help employers withstand claims for inflation-matching pay rises.

“But the situation on the ground is more complicated. Lack of quality in the available labour supply might, therefore, mean that the market is tighter and potential wage pressures higher than measures of the amount of labour available suggest.”

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