CIPD warns pay rises in 2016 will not match heightened expectations

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Pay rises may not match increasingly giddy expectations for this  year
Pay rises may not match increasingly giddy expectations for this year

Employment will rise by as much as half a million in 2016 but average wage growth is likely to plateau after the introduction of the government’s national living wage, the CIPD is predicting.

The Office for Budget Responsibility (OBR) and the Bank of England has forecast average earnings growth will be around 3.5 per cent in 2016, but Mark Beatson, who is chief economist at the CIPD, has labeled this statement as “very optimistic”, especially given the fact that business will have to adapt to new costs such as the apprenticeship levy and the new living wage, which will be launched in the Spring.

Expectations

Pay expectations for the year ahead will actually centre on a 2 percent increase, but as inflation is also expected to remain low, most workers will still feel better off nevertheless, the CIPD is claiming.

The introduction of the compulsory national living wage for over 25s might push up the official figures for average earnings, Beatson said, other cost increases in the labour market, including the apprenticeship levy and increased pensions costs, “will potentially restrict the ability of employers to afford significant pay rises”.

 

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