Basic pay for private and public sector staff to rise by 5%

Basic pay public sectorBasic pay for public sector workers is expected to increase by 5%, the same rate as private sector staff for the first time since early 2021, according to research from the Chartered Institute of Personnel and Development (CIPD).

The professional body for HR and people development’s Labour market outlook, which is released every quarter, surveyed more than 2,000 UK employers on their pay, hiring and redundancy intentions.

It found that this is the biggest expected pay rise for public sector workers since the report began in 2012. One in four (28%) employers plan to increase wages in the next 12 months to reduce the impact of the cost-of-living on employees, and 11% plan to give bonuses, allowances or lump sums to cover increased living costs.

Four in 10 (41%) of employers have hard-to-fill job vacancies, while 51% of public-sector and 38% of private-sector employers have roles that are hard to fill. The majority of employers in healthcare and education expect problems filling vacancies in the next six months, with 42% of public sector employers (42%) expecting problems filling roles over the next six months, compared to 19% of private sector employers.

One-quarter (24%) with hard-to-fill vacancies plan to introduce or increase automation to address them, almost twice the level in summer 2022 (13%).

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Redundancy intentions have fallen for the first time since winter 2021/22, with 17% expecting to make redundancies in the three months to December 2023. Seven in 10 (69%) plan to recruit in the next three months, rising to 85% in the public sector, and 39% have turned to counteroffers to retain key staff over the past 12 months.

Jon Boys, senior labour market economist at CIPD, said: “The post-pandemic economy has been characterised by high vacancies and dwindling candidate supply and this dynamic continues. It’s no surprise therefore that employers are expecting pay increases to match that of the private sector to remain competitive. However, it’s important for employers to also focus on the non-remuneration aspects of roles to attract and crucially retain people. This includes paying attention to job quality through good job design and by offering a range of flexible working options.”