Wages set to grow by 1.8% in 2014

Wages are set to grow by just 1.8% in 2014, according to a report by EY.

Its EY Item Club’s latest quarterly forecast also found that wages will slowly start to rise, growing up to 2.7% by 2015 and 3.5% by 2016.

Peter Spencer, chief economic advisor to the EY Item Club, said: “It is hard to find another episode in time where employment has been rising and real wages falling for any significant period.

“The weakness of real earnings is proving to be the government’s Achilles heel and could prove to be the weak spot in the recovery.”

The report predicted that, in the next two years, 400,000 older employees will remain in their jobs for longer and retire later in life.

However, it also found that increasing workforce mobility over the past decade has prompted employers to build talent strategies that account for high levels of staff tenure, with the expectation that employees will only stay with an organisation for three to five years.

Stuart Steele, human capital partner at EY, added: “The challenge for the HR director is to ensure that the organisation gets the best out of is people within their relatively short tenure.

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“In these cases, the quality of development experiences on offer can become more important, or at least equally important, as the remuneration packages on offer.

“Policy makers and employers will need to adapt and evolve their HR policies to keep pace, or risk losing out in the war for talent.”