Employers raising wages by 3% this year to keep ranks filled, says CIPD

Employers expect to raise wages by 3 per cent this year in the face of increasing recruitment and retention difficulties, according to a new survey.

The CIPD, the professional body for HR and people-development, has revealed its latest quarterly labour market outlook, which saw more than 1,000 employers in January asked about their hiring, pay and redundancy intentions for the first quarter of the year.

Overall, employers report that the median basic pay increase in their organisation (excluding bonuses) in the 12 months to December 2022 will be 3 per cent, the highest figure recorded in the last ten years of the CIPD’s reporting.

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Almost half of employers with retention difficulties have raised the pay of existing staff in the last six months, the survey found. Picture: Matt Cardy/Getty Images.

Seven in ten said they planned to recruit in the next three months, and just one in ten planned to make redundancies. Additionally, 41 per cent reported increased employee turnover or difficulty with retaining people over the last six months, and about two thirds anticipated problems filling vacancies in the next half year.

Jonathan Boys, labour market economist for the CIPD, praised more employers “looking beyond pay increases to help attract and retain staff by providing more flexible working opportunities and investing in more training and development, as well as taking steps to support employee health and wellbeing”.

“However, the UK Government must also address skills policy failings to support greater employer investment in workforce training. In particular, there is a growing need to reform the Apprenticeship Levy into a more flexible training levy to help reverse the falling number of apprenticeships going to young people, and enable employers to use the levy for other forms of more flexible and cost-effective training for existing employees.”

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