Stronger wage growth predicted

There are higher wage growth expectations in the private sector, driven by a fall in the number of applicants for vacancies.

This is one of the conclusions of the CIPD’s Summer 2019 Labour Market Outlook, a quarterly survey which provides a set of forward-looking labour market indicators, highlighting employers’ recruitment, redundancy and pay intentions for the third quarter of 2019. The survey took place in June 2019 and is based on responses from 2,104 establishments.

The LMO points to higher wage growth expectations in the private sector, with median basic pay expectations in the private sector increasing to 2.5% compared with 2% three months ago. At the same time, median basic pay expectations have risen to 1.5% from 1% in the public sector. In addition, significant minorities of employers in sectors such as construction, retail and hospitality are also signalling that rising recruitment and retention pressures are putting pressure on salaries for most staff. Of particular note, says the survey, is the increase in the number of employers expecting a basic pay increase of more than 3% in the next year. More than a third of employers (36%) plan to increase basic pay by at least 3% compared to 28% of employers in the same period last year. However, overall median basic pay expectations remain unchanged at 2%.