Pay continues to be squeezed

Pay packets will continue to be squeezed at 1.6%, according to research by the Chartered Institute of Personnel and Development.

The CIPD Labour market outlook survey found that average basic pay award predictions for public sector employees of 0.2% continue to fall behind the private sector predictions of 2.5%.

The report also found that 62% of respondents were keeping higher levels than necessary to maintain the skills in the organisation. Almost two thirds of private sector firms say that they feel they will have to cut back on labour if their output or service delivery does not increase in the next year.

The report also found:

The number of employers planning to make redundancies in the third quarter of 2012 has fallen from 32% three months ago to 29%
36% of respondents expect there to be fewer entry-level jobs at their organisation in ten years’ time.

Gerwyn Davies, labour market adviser at the CIPD, says: “Recent falls in unemployment suggest that the labour market is on a sound footing, but a closer examination reveals that many employers are holding on to more staff than is required by the current level on order to retain their skills. This is a make or break moment for employers - unless growth picks up many will find that they cannot hold on to some workers any longer.”