Business

Employers expect private sector pay to increase by 4% in 2024, research suggests

It is the first predicted fall since spring 2020, said the Chartered Institute of Personnel and Development.

Pay expectations in the public sector have fallen from 5% to 3%, a report says
Money stock Pay expectations in the public sector have fallen from 5% to 3%, a report says (Peter Byrne/PA)

Employers believe pay will increase by 4% in 2024 in private firms, 1% lower than previous years, research suggests.

It is the first predicted fall since spring 2020, said the Chartered Institute of Personnel and Development (CIPD).

Pay expectations in the public sector have fallen from 5% to 3%, said the report.

The CIPD said its research among 2,000 employers also found that fewer expect their workforce to grow than in previous quarters.

A third of respondents said they plan to increase their total staff level over the next three months while one in 10 will cut staffing levels.

Three in five employers say they continue to report hard-to-fill vacancies and one in five expect significant problems filling vacancies over the next six months, said the report.

Jon Boys, senior labour market economist for the CIPD, said: “We’ve seen a sustained period of high wage growth in response to a tight labour market, and high inflation pushing up the cost of living.

“Pay growth has helped individuals but it leaves employers with a higher wage bill to cover.

“To see a sustained return to growth, there needs to be a real focus on boosting productivity by investing in workplace skills and technology.

“It’s also in employers’ interest to communicate with employees their wider benefits package and improve job quality to compensate if they are planning to reduce base pay increases.

“The cost-of-living crisis is not over for many workers so finding other ways to help them besides pay, such as providing flexible working where possible to reduce commuting or childcare costs can make a big difference.”