[UK] Public-sector pay rises will overtake private-sector

In the UK, new research has found that public-sector employers now expect to raise pay faster than their private-sector counterparts for the first time since late 2020, following government approval of significant public-sector pay rises funded in part by higher employer taxes, Reuters reports.

The Chartered Institute of Personnel and Development (CIPD) surveyed 2,000 employers from September 18 to October 9 and discovered that median expected pay rises for the coming 12 months in the public sector had risen to 4 per cent from 2.5 per cent the quarter before.

This takes the public sector above the median for private-sector pay settlements, which remains at 3 per cent. Considering the next three months alone, public-sector employers reportedly expected new settlements to raise pay by a median of 5 per cent.

Speaking to Reuters, James Cockett - CIPD senior labour market economist - said, "Significant public sector pay awards announced since the election, along with the additional public sector spending announced in the recent budget, have provided a welcome boost to public sector employers and workers."

In July, the UK finance minister Rachel Reeves announced pay rises of 4.75-6 per cent for millions of public-sector workers.

Public-sector pay lagged behind rises in the private sector and a sharp increase in inflation over the course of the pandemic.

Mr Cockett said private-sector firms now faced increased costs that will potentially affect their hiring plans and wage setting.

On October 30, Ms Reeves unveiled the biggest tax increases since 1993, including a 25 billion pound ($32 billion) jump in social security contributions paid by employers alongside a 6.7 per cent rise in the minimum wage.

"These increased business costs are likely to act as a barrier to growth and could lead to employers offering lower pay rises, being more cautious about investing in workers' skills or taking on new staff," Mr Cockett said.

Official data due for release on November 12 is reportedly expected to show annual growth in average weekly earnings overall (generally higher than pay settlements slowed to 4.7 per cent in the three months to September from 4.9 per cent in the three months to August.

The Bank of England is closely monitoring wage growth as it tries to gauge inflation pressure in the economy. Earlier this month it said further interest rate cuts are likely to be gradual following its cut of the benchmark Bank Rate from 5 per cent to 4.75 per cent.

Source: Reuters

(Links and quotes via original reporting)

In the UK, new research has found that public-sector employers now expect to raise pay faster than their private-sector counterparts for the first time since late 2020, following government approval of significant public-sector pay rises funded in part by higher employer taxes, Reuters reports.

The Chartered Institute of Personnel and Development (CIPD) surveyed 2,000 employers from September 18 to October 9 and discovered that median expected pay rises for the coming 12 months in the public sector had risen to 4 per cent from 2.5 per cent the quarter before.

This takes the public sector above the median for private-sector pay settlements, which remains at 3 per cent. Considering the next three months alone, public-sector employers reportedly expected new settlements to raise pay by a median of 5 per cent.

Speaking to Reuters, James Cockett - CIPD senior labour market economist - said, "Significant public sector pay awards announced since the election, along with the additional public sector spending announced in the recent budget, have provided a welcome boost to public sector employers and workers."

In July, the UK finance minister Rachel Reeves announced pay rises of 4.75-6 per cent for millions of public-sector workers.

Public-sector pay lagged behind rises in the private sector and a sharp increase in inflation over the course of the pandemic.

Mr Cockett said private-sector firms now faced increased costs that will potentially affect their hiring plans and wage setting.

On October 30, Ms Reeves unveiled the biggest tax increases since 1993, including a 25 billion pound ($32 billion) jump in social security contributions paid by employers alongside a 6.7 per cent rise in the minimum wage.

"These increased business costs are likely to act as a barrier to growth and could lead to employers offering lower pay rises, being more cautious about investing in workers' skills or taking on new staff," Mr Cockett said.

Official data due for release on November 12 is reportedly expected to show annual growth in average weekly earnings overall (generally higher than pay settlements slowed to 4.7 per cent in the three months to September from 4.9 per cent in the three months to August.

The Bank of England is closely monitoring wage growth as it tries to gauge inflation pressure in the economy. Earlier this month it said further interest rate cuts are likely to be gradual following its cut of the benchmark Bank Rate from 5 per cent to 4.75 per cent.

Source: Reuters

(Links and quotes via original reporting)