Leading South West recruitment agency CMD Recruitment share their insight into the labour market .

With inflation at its highest rate since the 1980s , the cost of living is increasing . In response , employees are demanding higher wages to help keep pace with the rise in their household expenses .

Employee strikes indicate that many of these pay increases are long overdue , with some professions having been dealt a pay decrease in recent years . We ’ ve seen nurses , junior doctors , ambulance workers , postal workers , teachers and rail workers striking in recent months .

The good news for employees is that the vast majority of employers are anticipating pay increases in 2023 . But how much can you expect , and what will this mean for the wider economy and working conditions ?

According to a recent XpertHR report , 91 % of employees are likely to receive a pay rise in 2023 . And 89 % of these employers state that the rising cost of living is the driving force behind these pay increases .

The majority of these increases could be the result of an increase in the National Minimum Wage , which will compel employers to increase the minimum amount they offer . This is following advice from the low pay commission , which is an independent body

that advises the government on the National Minimum Wage .

XpertHR also found that pay is currency at a 32-year high , but it is still trailing behind inflation , which demonstrates just how serious this situation is for the wider economy .

The report suggests that the average increase will be between 3.5 % and 6 % in the coming quarters . There will be a median pay increase of 5 %.

The report also shows that around 85 % of employees can expect to receive a higher pay increase than in previous years .

Workers in the private sector are seeing their salaries increase far more than public sector workers . In many public sector roles , workers are experiencing a real-terms pay cut , and are going on strike to address this issue .

Private sector employers are facing their own challenges , with wage increases now being the norm in order to attract and retain the workers . Public-Private wage gap increases The annual growth for private sector wages is currently at 6.9 % while public sector workers are trailing behind with an annual growth rate of just 2.7 %. This includes bonuses for the same period . While public sector workers typically enjoy healthy pensions , and this

increases the overall liability when pay increases are offered , the private sector is still leading the charge .

How does this impact the wider economy ?

Wage increases drive inflation and inflation drives wage increases , which has prompted the top economists to suggest that workers should accept that they will be worse off . This comment was met with anger by public and private sector workers who are struggling with the cost of living crisis .

Employee salaries are often one of the biggest expenses for businesses , so if their costs increase , they will have to increase the cost of the goods and services they are providing . This feeds into the increased cost of living and helps to fuel inflation .

Another argument is that increased spending power during a time of high inflation can fuel further inflation . If employees are given too much of a pay rise , this can trigger increased demand and this can further increase prices as this impacts supply levels .

What does this mean for workers ? Private sector workers are in the best position to request pay increases at this moment in time . Public sector workers are likely to have to wait for the outcome of government pay negotiations with their respective unions .

Job vacancies are currently falling , but they are still higher than they have been for decades . This means that employees have bargaining power when it comes to requesting a pay rise . Employers are concerned that they will lose important staff members if they can ’ t keep up with pay demands .

Workers who haven ’ t had a pay increase for a number of years may now be asking for a pay rise in line with inflation . Those who have annual pay reviews may be looking for a higher pay increase than they would usually receive .

Some companies are offering higher starting salaries to attract new workers , so workers might have to secure an offer from another company in order to take advantage of the current situation . Workers are also using job offers from other companies as bargaining power to secure a healthy pay rise from their current employer .

It ’ s also possible that workers could see the bubble burst , with employers using fire and rehire tactics to bring down wages again once inflation is under control .

For more info : www . cmdrecruitment . com

@ bathcollege