Pay growth expectations were found to be at their lowest level since 2022, according to new research by the Chartered Institute of Personnel and Development (CIPD).
For its latest Labour market outlook report, the professional body for HR and people development surveyed 2,032 UK employers about their pay, hiring and redundancy intentions.
It found that median basic pay increase expectations fell from 4% to 3% in the private and voluntary sectors, remaining at 5% throughout 2023 before falling to 4% at the turn of this year. Among public sector employer respondents, median basic pay increase expectations dropped from 3% to 2.5%.
Half (48%) of public sector employers said they were planning a pay decision in the next three months, between July and September, compared to just 17% of the private sector. During this period, they anticipated pay increases of 2.5% compared to the 4.75% to 6% that has been confirmed by Chancellor Rachel Reeves.
Furthermore, two-thirds (66%) said they plan to recruit in the next three months, with employment intentions the highest in the public sector (81%). 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, has continued to fall, at +18 this quarter, +19 last quarter, and +22 the quarter before.
James Cockett, senior labour market economist for the CIPD, said: “Our survey suggests that many public sector employers did not expect the level of pay rises that have been put in place by the government for the rest of 2024. Falls in expected pay rises were anticipated now inflation is within a tolerable range for employees.
“However, many workers will still feel worse off than they did a couple of years ago, so other benefits such as providing flexible working, offering benefits that help boost take home pay, and taking steps to improve job quality, are in employers’ interest to help both support and retain staff.”
