The Chartered Institute of Personnel and Development (CIPD) has warned that pay rises for UK employees are set to slow this year as businesses grapple with economic uncertainties. Despite enhanced business confidence, the expected pay increase for employees is predicted to shrink from an average of 5% to 4% in 2024. Notably, this decline, a first since the onset of the pandemic, comes after more than a year of holding at a 5% increase.
The CIPD report also shed light on the disparity between private and public sector wage increases. Median increases in the public sector are expected to tumble from 5% to a mere 3%. These figures emerge simultaneously with businesses limiting their hiring plans. CIPD predicts labour market strain will lessen as competition for staff diminishes.
Derek Mackenzie, CEO of Investigo, highlighted the central role that pay plays in employment, particularly in recruiting and retaining staff. He however, noted, "There is much more to a role than pay alone. Organisations must offer aspects such as career progression, flexible workplace policies, training programmes, a supporting culture, career mentoring and other factors to make staff feel welcomed and valued."
Mackenzie emphasised the importance of training, indicating that offering support and guidance on training programmes is a unique selling point in the job market. "Staff want to better themselves to enhance their own skills and make themselves more valuable both inside and outside of their role," he explained. Amid economic turbulence, Mackenzie recommended that businesses should continue placing employees at the heart of their decision-making to ensure mutual growth and prosperity.
Of the organisations surveyed, a third plan to expand their staff size in the next three months, while 10% anticipate reducing their employee count. These hiring decisions align closely with the slowing pay growth forecast, leading to a potential mitigation in the fierce competition for talent in the market.
Looking beyond just pay and employment numbers, Elizabeth Anderson, CEO of the Digital Poverty Alliance, views this economic uncertainty as a possible catalyst for increasing digital poverty. She remarked, "As many as 19 million people across the UK are already suffering from digital poverty, through a lack of access to connectivity, devices and digital skills, and with pay growth stalling, that number could be on the rise."
Anderson warned against the potential outcome of reduced pay growth that could force many more people offline, deepening the digital divide. She encouraged the government and employers to prioritise equipping their teams with proper digital resources in both their work and personal lives to combat the risk of increasing digital poverty.