UK employers offer average 2.8% pay rise to staff – survey By Reuters

© Reuters. FILE PHOTO: A lorry driver posts a job advertisement on the side of his vehicle’s advertisement in London, Britain, October 13, 2021.

LONDON (Reuters) – British employers are offering employees an annual wage settlement of an average increase of 2.8%, well below the rate of inflation, a survey showed on Monday.

The Chartered Management Institute said many businesses were wary of offering wage increases at a time when other costs were rising and some feared consumer demand would soon falter.

“We have yet to see the full effects of the Ukraine conflict filter, and it is clear that there is increasing pressure across the board and there are undoubtedly some rocky times,” said CMI policy director Anthony Painter.

Wage settlement in the private sector averaged 3.2% compared to 2.4% in the public sector, CMI data showed, broadly in line with other similar surveys.

While a higher wage increase would help reduce the cost of living being felt by most British workers, the Bank of England is concerned that a steep wage hike could make it harder to get inflation back on target.

Consumer price inflation hit a 30-year high of 7.0% in March, and some economists think it could reach double digits later this year.

The BoE’s own survey of employers pointed to payouts of around 5% this year, much higher than the general trend.

So far there has been little sign of growth on that scale.

Last month, pay data company XpertHR said the average rewards were 3% in the three months to the end of February, the joint-highest since 2008.

The Chartered Institute of Pay and Development (CIPD) said there was also a three percent average wage increase that businesses had planned for 2022 overall.

According to official data published last week, the average annual salary increase excluding bonus – which includes increases due to job moves and promotions as opposed to salary settlement data – stood at 4.0% in the three months to February.

The CMI survey showed that between March 31 and April 5, almost half of the firms surveyed had definitely decided to raise salaries this year, with 48% either deciding against the hike or uncertain.

In contrast, XpertHR and CIPD surveys have previously shown less than 10% of employers intend to freeze wages.

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