A recent survey conducted by the Chartered Institute of Personnel and Development (CIPD) suggests that the robust pay growth observed in the private sector in the UK is expected to be mirrored in the public sector in the coming year. The survey, which involved 2,000 employers and ran from September 18 to October 8, indicates that both private and public sector employers are planning 5% pay increases. This implies that public workers are on track for their most substantial pay raise since the CIPD initiated its surveys in 2012.
The survey results align with Prime Minister Rishi Sunak's announcement of a pay raise of over 6% for public workers, including teachers and doctors, in July. The Bank of England anticipates a wage growth of 4.25% in the next year, a significant factor in its decision to maintain interest rates at a 15-year high of 5.25%, despite a decline in headline inflation and signs of economic stagnation.
The survey also revealed that 51% of public-sector employers reported difficulties in filling vacancies, compared to 38% in the private sector. Although overall redundancy intentions decreased for the first time in nearly two years, with 17% of employers anticipating some redundancies in late 2023, challenges in finding suitable candidates persist.
CIPD's senior labour market economist, Jon Boys, highlighted the ongoing dynamics in the post-pandemic economy, characterized by high job vacancies and a diminishing supply of candidates. He noted that the demand for skilled workers, particularly in the public sector, remains strong, leading employers to expect pay increases to stay competitive.
The survey additionally indicated that a quarter of organizations facing challenges in filling vacancies plan to introduce or enhance automation, almost double the level recorded in mid-2022. This suggests a growing trend toward automation as a response to workforce challenges.
Official employment data expected on Tuesday is likely to underscore the Bank of England's predicament, with employment numbers projected to decrease while wage growth remains close to record highs.
