From the TUC

Pay growth to slow and public sector restraint a big factor, says CIPD

11 May 2015, by in Economics

A new survey of 1,013 employers published by the CIPD today reports that pay growth is expected to slow during the coming year, and that many employers now believe that public sector restraint is slowing pay growth across the whole economy:

  • “Basic pay is expected to grow by just 1.8% in the coming year, down from 2% in the previous quarter.
  • The two key reasons employers give for not being able to meet the Bank of England’s inflation rate target of 2% in their pay awards are public sector pay restraint (41%) and affordability (32%).”

This worrying prediction compares unfavourably with the OBR forecast of 2.0% growth and the March Treasury round-up of forecasts, which suggested that earnings would grow by 2.5% during 2015.

If they are going to turn this pay-light recovery into something more substantial then clearly the new government will need to turn its attention not only to raising productivity and investment in staff in the private sector but also to its own role as an employer.