Recent figures have shown that pay is up strongly again, particularly in certain sectors experiencing labour shortages, such as hospitality, engineering and logistics.
Responding to the ONS labour market statistics covering pay, Neil Carberry, REC Chief Executive, said, “Permanent hiring has been dropping in the UK for most of the year, reflecting employers’ concerns about inflation and the performance of the broader UK economy.
“Even so, vacancies remain above their pre-pandemic level. Businesses tell us that they feel quite confident about the resilience of their own businesses, and are ready to invest as the economic picture improves, which provides some hope of a turnaround in hiring in the next few months.
“Pay is up strongly again as some sectors, such as hospitality, engineering and logistics continue to experience labour shortages. But the main driver of higher pay is now 2023 pay settlements, which are still in the annual date.”
Neil added, “These were high as firms reacted to the shortages of 2022 by paying existing staff more to retain them and cushion against inflation. A very large increase in the National Minimum Wage has also driven the annual figures up. We would expect pay growth to fall with inflation next Spring as 2024 pay awards will not be as high. It will be important for the Low Pay Commission to have this in mind when setting the minimum wage for 2024, too.
“Any sustainable growth strategy must be built on the skills and productivity of the British workforce. Step up on skills, welfare to work, infrastructure, transport and taxation in ways which boost labour market participation at next month’s Autumn Statement will be vital to recovery.
“Failing to fill the shortages the economy currently has would lead to a 1.2% fall in expected GDP by 2027 – which will cost the economy anywhere between £30 billion and £39 billion every year. This figure is just short of the entire current defence budget, or two whole Elizabeth Lines.”
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