Low inflation and higher labour costs are likely to slow down pay rises and pay rise expectations have now fallen to their lowest level for more than two years. The latest quarterly Labour Market Outlook survey report from the CIPD, the professional body for HR and people development, suggests that wage inflation will fall in the year ahead. The CIPD’s report suggests that median basic pay rises of just 1.2 per cent are expected in the 12 months to December 2016, compared with two per cent just three months ago. |
The low pay growth expectations for the year ahead can be partly explained by an increase in employment costs. There has been an increase in the proportion of employers citing pension auto-enrolment, increases to the National Minimum Wage and low inflation as key reasons why they haven’t been able to afford to pay their workers a basic pay rise of two per cent or above in the last twelve months.