Wages are rising as employers find it harder to recruit in key areas.
A growing number of employers are raising wages to tackle a lack of skilled workers, according to the latest Labour Market Outlook survey.
The survey from Adecco and the Chartered Institute of Personnel and Development also shows the gap between public and private sector pay is widening. Among private sector employers, the expected median pay has risen above 2% to 2.5%. However, for the public sector, pay rise expectations have slowed from 2% in the last quarter to just 1.1%.
Almost half (49%) of employers considering a pay review over the course of the year are anticipating an increase to basic pay. However, nearly as many (43%) say it is unknown at this stage which way it will go.
The number of employers expecting to increase staff levels continues to fall, the survey reports, and the the proportion of hiring employers with hard-to-fill vacancies rose for the fourth successive quarter — 71% report that at least some of their vacancies are proving hard-to-fill. The level was at 64% a year ago.
Some 43% of employers say it has become tougher to fill vacancies over the past 12 months and 32% are experiencing a similar problem in retaining staff. In response, 56% of employers have raised starting salaries, up from 48% last quarter. Similarly, an increasing proportion (55%) of employers overall have used pay rises to help with retention.
The need to raise wages is leading to a renewed focus on productivity. However, the survey says about two-thirds (64%) of employers do not have ‘improving productivity’ as a current priority.