Starting salaries are expected to stay low for the remainder of the year after a job survey found just 2% of employers offered above-inflation pay rises to new recruits last year. It was also uncovered that just 20 out of 1,000 employers had given a significant rise to new workers.
These figures have added to the already growing concerns that a surge in job creation over the 18 months and skills shortages has not positively affected take-home salaries.
The survey that uncovered these figures was carried out by the Chartered Institute of Personnel and Development (CIPD) and is likely to make a contribution to the debate over wages growth. Official data on this will be released on Wednesday and is expected to show stagnation in June.
A majority of city economists believe that these figures (to come from the Office for National Statistics, ONS) will reveal a fall in wages at around 0.1%. In fact, most analysts are dismissing figures from the ONS as they are inaccurate due to a sharp increase in bonuses in 2013 following the cut in the top rate of tax.
It is expected that the Bank of England will take the figures from the ONS on board and will downgrade its forecast regarding average wage rises, which was previously forecasted to hit 2.5% this year.
The CIPD said the following:
“Despite reports from various business surveys hailing a rise in starting salaries, figures from the CIPD’s Labour Market Outlook reveals that only 2% of employers report a significant increase in starting salaries.”
The organisation’s chief economist, Mark Beatson, said he was surprised at the high number of employers that had not conducted a pay review. It was found that just two fifths of employers reported that they had carried out a pay review since the start of 2014, while 50% of the private sector businesses had worked through the traditional April pay round without conducting a review.
Without a significant increase in wages above the 2.6% retail price index (RPI), the Bank of England may well find themselves under pressure to postpone planned interest rate rises until 2015.