UK public sector employers plan to raise pay by most since 2012

FILE PHOTO: Commuters walk across London Bridge toward the financial district, in London

By Suban Abdulla

LONDON (Reuters) - British public sector employers plan the biggest pay increases in over a decade and private sector deals are set to remain high, according to a survey published on Monday, potentially adding to worries at the Bank of England.

The Chartered Institute of Personnel Development (CIPD) said expected median pay settlements in the public sector for the coming 12 months rose to 3.3%, up from 2% in the previous three months, and the highest level since records started in 2012.

However, the gap between public and private employers' wage expectations remained wide, with those in the private sector expecting to raise pay by 5% in the coming year, unchanged from three months before.

Jon Boys, senior labour market economist at the CIPD, said higher pay agreements would be key for many workers amid the cost of living squeeze with inflation running at more than 10% in March.

The BoE, which is concerned that strong wage rises could lead to high inflation becoming embedded in the economy, lifted the Bank Rate by a quarter percentage point to 4.5% last week.

The BoE on Thursday forecast stronger wage growth in the medium term than it previously anticipated.

Official data showed average private sector wages in the three months to February were 6.1% higher than a year earlier.

While Britain's economy narrowly avoided a recession in the first quarter of 2023, CIPD's survey highlighted struggles to fill vacancies, especially in the education and health sectors.

Healthcare workers and teachers, among others, walked out in recent months over pay and work conditions.

More than half of survey respondents in the public sector noted struggles with hard-to-fill roles and 45% expected similar problems in the next six months.

Four in 10 private sector recruiters reported hard-to-fill jobs while 23% anticipated significant difficulties filling vacancies over the next six months.

"The labour market may have become less competitive in recent months but there is still strong demand for workers across the economy," Boys said.

As well as raising pay, the CIPD's quarterly survey showed employers were planning to respond to hard-to-fill vacancies by skills training and increasing the duties of existing staff.

The net employment balance, which gauges the difference between recruiters expecting to increase or decrease staff levels in the next three months, stood at +27.

(Reporting by Suban Abdulla; Editing by William Schomberg)