The HR organization cautions that employees in the UK can anticipate reduced salary increases for the current year.

Estimated read time 3 min read

According to a report from the professional organization for human resources, employers in the UK are expected to decrease their hiring plans and offer lower salary increases to workers this year.

According to the latest labor market forecast from the Chartered Institute of Personnel and Development (CIPD), employers are anticipating the smallest salary increases since the start of the pandemic.

Despite increased confidence in the business sector, as reported by accounting firm BDO, output in July 2022 reached its highest level.

Unfortunately, the CIPD reported that the amount of employers intending to increase their number of employees had decreased compared to previous periods.

The organization stated that as the competition for employees decreases, they anticipate a decrease in the tightness of the labor market, resulting in less bargaining power for workers during pay negotiations.

According to the CIPD, the typical raise has remained consistent at 5% for over a year. However, it is predicted to decrease to 4% this year, which would be the first drop since the beginning of the pandemic.

The median pay raise for employees in the private sector decreased from 5% to 4% in the previous quarter. The public sector was even more challenging for workers, as average settlements dropped from 5% to 3%.

According to the CIPD, employers facing difficulties in filling positions are no longer willing to sacrifice profits by increasing wages. Instead, it seems that businesses are choosing to decrease their hiring efforts.

In general, 33% of employers intended to raise their total number of staff in the next three months, while 10% planned to lower their overall staffing levels.

The overall gap between businesses seeking growth and those seeking to downsize decreased slightly to +22, down from +26. In the government sector, about 20% of employers were considering job cuts.

According to Jon Boys, a senior economist specializing in the labor market for the CIPD, this appears to be a significant moment in the UK job market. The difference in salary expectations between the public and private sectors is once again growing, coinciding with increasing strains on public services.

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“Employers are now shifting their focus from assisting employees with the rising cost of living to prioritizing business sustainability and growth, which may result in changes in staffing levels in certain areas.”

According to the findings of BDO’s report, the performance of UK businesses showed improvement in January, primarily due to a recovery in the services sector, which is the largest sector in the country.

Kaley Crossthwaite, a partner at the firm, expressed optimism about the strong performance of our services industry in January.

However, BDO’s outlook on employment matched that of the CIPD, with its employment index, which measures hiring intentions, falling for the seventh consecutive month.


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