# UK firms plan biggest pay rises since 2012 to fill staff gaps
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-02-13
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: UK Employers to Raise Wages by Record Levels, Still Below
Meta Description: Survey shows British employers expecting to raise wages by 5%, still below inflation, amidst fears of escalating costs. Get insights on the latest labour market
URL: https://financedigest.com/uk-firms-plan-biggest-pay-rises-since-2012-to-fill-staff-gapshtml

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By Suban Abdulla

LONDON (Reuters) – British employers expect to raise wages for their staff by the most in at least 11 years but the 5% pay deals for workers would still fall well below expected inflation, a survey published on Monday showed.

With the Bank of England fearing the surge in inflation could be harder to tame if pay deals keep rising, the Chartered Institute of Personnel Development (CIPD) said 55% of recruiters planned to lift base or variable pay this year as they struggle to hire and retain staff in Britain’s tight labour market.

Expected median annual [pay awards](https://www.financedigest.com/uk-employers-see-slight-fall-in-pay-awards-over-2023-xperthr.html "UK employers see slight fall in pay awards over 2023 – XpertHR") in 2023 rose to 5% – the highest since CIPD records began in 2012 – from 4% in the previous three months.

More than half of respondents reported having problems filling vacancies, and nearly one in three [expected similar issues](https://www.financedigest.com/gsk-expects-us-launch-of-rsv-vaccine-with-no-supply-issues.html "GSK expects US launch of RSV vaccine with no supply issues") in the next six months.

Skills and labour remain scarce in the face of a labour market which continues to be surprisingly buoyant given the economic backdrop of [rising inflation](https://www.financedigest.com/oil-rises-about-2-with-u-s-and-china-inflation-in-focus.html "Oil rises about 2% with U.S. and China inflation in focus") and the associated cost-of-living crisis,” Jon Boys, senior labour market economist at the CIPD, said.

The survey also showed the [gap between public and private employers’ wage expectations widened](https://www.financedigest.com/using-technology-to-help-bridge-the-widening-financial-advice-gap.html "Using technology to help bridge the widening financial advice gap"). Planned pay settlements in the [public sector](https://www.financedigest.com/guess-what-public-sector-adoption-of-e-invoicing-on-the-rise.html "GUESS WHAT? PUBLIC SECTOR ADOPTION OF E-INVOICING ON THE RISE!") fell to 2% from 3% in the quarter before, compared to 5% in the private sector, the CIPD said.

The results highlighted the squeeze on living standards as key workers including nurses, teachers and public transport staff stage a series of strikes over [pay and work](https://www.financedigest.com/spain-offers-to-pay-companies-testing-a-4-day-work-week.html "Spain offers to pay companies testing a 4-day work week") conditions.

BoE Governor Andrew Bailey last week expressed concerns about wage-setting, [despite signs that the surge](https://www.financedigest.com/suedzucker-quarterly-profits-surge-73-5-despite-cost-rise.html "Suedzucker quarterly profits surge 73.5% despite cost rise") in inflation has turned a corner.

Annual [inflation fell to 10.5% in December](https://www.financedigest.com/spains-12-month-inflation-slows-down-again-in-december-to-5-8.html "Spain’s 12-month inflation slows down again in December to 5.8%") after hitting a 41-year high of 11.1% in October. Bailey signalled inflationary pressures were still a worry despite the [BoE raising interest rates](https://www.financedigest.com/uk-economys-unexpected-bounce-spurs-more-boe-rate-hike-talk.html "UK economy’s unexpected bounce spurs more BoE rate hike talk") to the highest since 2008 this month.

The quarterly [survey showed recruiters](https://www.financedigest.com/uk-recruiters-slow-pace-of-pay-growth-in-march-rec-survey-shows.html "UK recruiters slow pace of pay growth in March, REC survey shows") were more willing to hire people returning to the workforce, including older workers and those with health conditions.

The CIPD surveyed 2,012 employers between Jan. 3 and Jan. 25.

[(Reporting by Suban Abdulla in London; Editing by William Schomberg)](https://www.financedigest.com/london-reclaims-place-as-preeminent-global-financial-centre-for-the-first-time-since-2013-according-to-global-regulatory-outlook-report-from-duff-phelps.html "London reclaims place as preeminent global financial centre for the first time since 2013, according to Global Regulatory Outlook report from Duff & Phelps")


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