Britons Warned of Slip in Wage Growth

By Staff, Agencies

UK workers may face lower wage increases this year as employers are mulling cutting pay rises amid persisting economic woes, a recent report by the Chartered Institute of Personnel and Development [CIPD] has found. 

The drop-in wage growth comes as many UK employers are cutting back on hiring plans due to slowing growth.  

The average future expected pay rise in the UK dropped to 4% in the final quarter of 2023, after holding at 5% for some time, marking the first fall since the beginning of the Covid-19 pandemic. The median expected increase across the private sector showed the same expected decline from 5% to 4%, whereas the expected decrease in the public sector was steeper, from 5% to 3%.  

“This feels like a key moment in the UK labor market,” said CIPD senior labor market economist Jon Boys. “The public and private sector gap in pay expectations is widening again, at a time of mounting pressures on public services,” he noted. 

Lower pay rises would deal a blow to Britons’ purchasing power and curtail disposable income at a time when living costs are rising, prompting many to re-evaluate their budgets and expenses, experts warned. 

“We’ve seen a sustained period of high wage growth in response to a tight labor market, and high inflation pushing up the cost-of-living. Pay growth has helped individuals but it leaves employers with a higher wage bill to cover,” Boys explained. 

The survey, which was conducted last month, involved over 2,000 employers. About a third of employers’ plan to increase their headcount over the next three months, while 10% anticipate reductions.