Responding to last week’s ONS figures, the CIPD believes that the ‘big pay squeeze’ is still to come as pay struggles to compete with rising prices.
The ONS report shows that unemployment is low (at 3.8%), however, candidates for jobs are in still short supply with many businesses struggling to fill roles.
Jonathan Boys, labour market economist for the CIPD, the professional body for HR and people development, commented, “Under such conditions we would usually expect inflation busting pay rises. However, pay is struggling to keep pace with rising prices. This means that regular pay is now about where it was in September 2020: the nation has effectively had a pay cut.
“A gap is also emerging between public sector and private sector pay. Regular pay (excluding bonuses) in the private sector grew at 4.7% compared to 1.7% in the public sector in the year to February 2022.
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Email Jaime“If a gap between private and public pay persists, a wedge will open up between the two and it could become increasingly hard for the public sector to compete for talent.
“The big pay squeeze is still in the pipeline. Employers have a big role to play in supporting their staff through this time. If the ability to award pay rises is limited, employers can look at the total employment offer.
“This includes designing jobs that include ample flexible working options. Financial wellbeing support can make a difference, as can revisiting the mix of benefits offered to make sure they work hard for employees, especially the lowest paid.”
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