Are wages set to rise faster in 2015?

The latest figures show that employers are facing dilemmas over pay, as wage rises fail to keep track with economic recovery and jobs growth. Will this continue into next year?

The Bank of England’s August 2014 Inflation report forecasts that “wage growth is likely to remain weak for the remainder of 2014”. The report notes that “a central judgment for the [Monetary Policy] Committee is the degree to which the current weakness in wage growth will persist.”

Pay settlement data collected by XpertHR has shown that pay awards were worth between 2% and 2.5% for most of the past four years. Employers told researchers that they do not have the ability, in the current economic climate, to offer higher increases.

The findings are in line with the CIPD’s quarterly Labour Market Outlook survey, published this week, which found wage growth is expected to remain weak even though output is growing strongly and the jobs market is buoyant. The CIPD’s survey of 1,000 employees shows that among those workers who have had a pay rise this year, the median increase has fallen to 2% from 2.5% in 2013.

Low wage growth continues despite preliminary estimates by the Office for National Statistics showing GDP grew for the sixth consecutive quarter, and that the economy is now larger than in the first quarter of 2008, just before the recession took hold.

The CIPD says job insecurity has held wages down until now, but the growth in jobs may encourage employees to move on, leaving employers with a dilemma about whether or not to review and raise pay.

You can discover employers’ future pay plans by taking part in the XpertHR pay prospects survey. Completing the survey will help XpertHR build up a comprehensive picture of pay settlement expectations for 2015, and all participants will receive a free copy of the survey results.