Public sector pay awards set to rise at record rate

A significant number of public sector employers expect to encounter hard-to-fill vacancies in the next six months, prompting forecast pay awards to rise at their fastest rate in more than a decade.

According to the CIPD’s spring 2023 labour market outlook, the median expected basic pay award in the public sector has risen to 3.3%, up from 2% in the previous quarter and the highest public sector pay forecast since the HR body started reporting this data in 2012.

Many employees in public sector roles including teachers, nurses and junior doctors have gone on strike over pay in recent months and remain in dispute with employers.

Across the entire economy, including the private and third sectors, the median expected basic pay settlement was 5%, unchanged on the quarter.

Sixty per cent of education, 55% of healthcare, and 47% of public administration and other public sector employers have hard-to-fill vacancies.

More than half of public sector employers expected significant or minor problems when filling jobs in the next six months.

Across all employers who responded to the CIPD’s survey, 50% were responding to having hard-to-fill vacancies by upskilling existing staff, while 48% were raising wages.

Public sector organisations were increasing the duties of existing staff in order to fill labour gaps at a higher rate (48%) than private sector employers (34%). Notably fewer public sector employers have been improving job quality (21%) compared to the private sector (32%).

Jon Boys, senior labour market economist for the CIPD, said: “The labour market may have become less competitive in recent months but there is still strong demand for workers across the economy, with public sector employers finding it particularly hard to find the staff they need.

“Pay will be key for many people in the cost-of-living crisis but employers should look beyond this to the full range of measures they can take to boost how they recruit and retain their employees. These include more inclusive approaches to recruitment, creating more flexible jobs, as well as investing in training and developing line managers’ people management skills.

“The UK government could also help employers upskill their workforce and fill skills gaps by reforming the apprenticeship levy into a more flexible skills and training levy.”

The survey of 2,019 senior HR professionals and decision-makers in the UK also found that:

• 45% of employers planned to increase pay, up from 37% in winter 2022
• 44% did not have a financial wellbeing policy, and did not plan to introduce one despite the cost-of-living crisis
• The net employment balance – which measures the difference between employers
  expecting to increase staff levels in the next three months and those expecting to
  decrease staff levels – remained stable at +27
• Net employment intentions continue to be strongest in the private sector at +30, compared with +22 in the voluntary sector and +16 in the public sector
• Only 17% of employers planned to make redundancies in the next three months.

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