The results of the study, published by the Chartered Institute of Personnel and Development (CIPD), showed that British employers plan to increase basic pay by an average of 4% over the next 12 months, compared with an expected increase of 5% until 2023 and at the end of 2022. This is the first such decline since the beginning of 2020, and it indicates less willingness to put up with higher labor costs. The estimate is based on a poll of 2,006 employers conducted by YouGov from Jan. 2 to Jan. 22.
The results of the study, which increase the likelihood of a weakening of domestic inflationary pressures, will also strengthen investors' confidence that the Bank of England may begin easing monetary policy later this year.
While wage increases in the private sector and non-profit organizations were in line with the average, public sector employers expect wage increases of 3% and recruitment at the slowest pace since 2019.
Among employers in general, the share of those who said they were financing wage increases through staff reductions increased from 12% to 21%, while the share of those who covered higher wage costs through profit or general overhead decreased from 50% to 37%.