According to a survey, the pressure to pay wages can be eased.
In its quarterly labor market outlook, released Monday, about two-thirds of employers are expected to have difficulty filling vacancies, the CIPD organization for HR professionals said. the next six months and a third expect these difficulties to be severe.
But few people now think they can solve the hiring problem by offering more money. Among those with vacancies that are difficult to fill, only 27% plan to respond by increasing their salary, compared with 44% who did so in the previous six months. In contrast, 37% said they plan to upskill their current employees, while a similar percentage are aiming to improve flexible working arrangements.
Jon Boys, labor market economist at CIPD, said the research shows “employers are running out of room to raise wages further” and are increasing their focus on retaining current employees. because it is increasingly difficult to outsource. He added: “They are saying that it is very difficult to buy new skills at the moment. . . they need to inculcate them”.
The CIPD survey, conducted in April, also found that it was increasingly unlikely for employers to accept higher wage bills within their margins, with the proportion steadily increasing. price increase plan.
The cooling off in wage growth will come as a relief for policymakers at the Bank of England, who warned earlier this month that nominal incomes are rising rapidly. can make high inflation last longer – although wages are rising much more slowly than prices.
But the BoE believes that pay pressure is if anything is likely to increase, after hearing from its agents that some businesses are considering one-time bonus and wage payments increased in the middle of the year.
CIPD’s finding that businesses will resist raising wages to attract new employees is also contradicts evidence from other surveys. Last week’s monthly report from the Employment & Career Federation showed that the percentage of employers reporting higher starting salaries remained near record levels in April.
The CIPD acknowledges that pay bonuses are still running at historic highs. Among employers who plan to consider paying wages over the next 12 months, the median base pay increase they predict is 3% – the highest since 2012.
Even in the public sector, where budgets are tighter, the average salary that employers expect has increased to 2%, up from 1% in the previous quarter.
But Boys said public-sector employers – who are even more willing to hire than their private-sector counterparts, but are less likely to raise wages and other benefits – could see this “day-to-day”. more difficult. . . for a talent show”.
Overall earnings growth in the economy is generally higher than in wages, because some people win larger salary increases through promotions, changing jobs, or receiving bonuses.
