Private sector pay rises tipped to slow this year in worrying financial report | Personal Finance | Finance

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Research suggests that employers anticipate a 4% increase in private sector pay in 2024, which is 1% lower than previous years. This is the first predicted drop since spring 2020, according to the Chartered Institute of Personnel and Development (CIPD).

The CIPD also reports that pay expectations in the public sector have fallen from 5% to 3%. Their research among 2,000 employers found that fewer expect their workforce to grow than in previous quarters.

A third of respondents plan to increase their total staff level over the next three months, while one in 10 will cut staffing levels. The report also reveals that three in five employers continue to report hard-to-fill vacancies and one in five expect significant problems filling vacancies over the next six months.

Jon Boys, senior labour market economist for the CIPD, said: “We’ve seen a sustained period of high wage growth in response to a tight labour market, and high inflation pushing up the cost of living.” He added, “Pay growth has helped individuals but it leaves employers with a higher wage bill to cover.”

Boys further stated: “To see a sustained return to growth, there needs to be a real focus on boosting productivity by investing in workplace skills and technology.” He concluded by saying, “It’s also in employers’ interest to communicate with employees their wider benefits package and improve job quality to compensate if they are planning to reduce base pay increases.”

“The cost-of-living crisis is not over for many workers so finding other ways to help them besides pay, such as providing flexible working where possible to reduce commuting or childcare costs can make a big difference.”

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