Will you be giving your staff a pay rise this year?

posted by 4 years ago in News

Britain’s employers plan to continue hiring more staff this year but will it limit pay rises as the national minimum wage increases according to a survey by the Confederation of British Industry (CBI).

The organisation has labelled the changes as the most important intervention in the labour market since Tony Blair’s introduction of the minimum wage and other employment laws in 1990. The CBI has also repeated its uncertainty over the effect the apprenticeship levy (which was announced in George Osborne’s autumn statement) will have.

Neil Carberry, the CBI Director for Employment and Skills has said;

“We live in an era of significant labour market interventions. The UK’s labour market is in fine fettle, though it’s clear that maintaining flexibility is of the utmost importance to employers. Companies are concerned about the apprenticeship levy and view it as a payroll tax, so the CBI is determined to work with the government to ensure that businesses see their money is spent in the best way.”

The survey included 342 employers which covers almost 1 million employees. 47% of those surveyed believe that the apprenticeship levy will be “costly and bureaucratic” however, this survey was carried out before the levy was confirmed (between August and October).

Many businesses have repeatedly criticised the skills shortages that they have experienced this year but whilst complaining they have also said how unenthusiastic they are about the apprenticeship levy. The employers that were surveyed have vented that the support for the aims of the apprenticeship levy is not good enough and they are worried that the government just want to hit targets on the amount of apprenticeships rather than the quality of them.

The survey has repeated the topic of the skills shortage, those who responded have said that this is the highest threat businesses are encountering for the second year running. The survey has increased the worry for businesses even further as they are stuck when it comes to finding someone who can replace the shortage that they are experiencing.

According to the survey, 43% of businesses are expecting their workforce to grow larger in the next twelve months whereas 13% believe that their business workforce will decrease. However, the poll has suggested that the amount of new permanent jobs will overtake the temporary jobs.

In the New Year, just over half (52%) of businesses have said that they intend increase pay so it is at least aligned with the RPI (retail prices index) – measure of inflation, which in November was 1.1%.

Two-fifths of those surveyed are expecting an impact from the rise in the national minimum wage as it goes from £6.70 to £7.20 for those aged 25 and above, 34% are anticipating raising the wages and 28% have said that they will have to employ fewer people as a result.

The impact of the effect on the service sector (an industry which relies on cheap labour) for example; hotels and retailers has been more ‘prominent.’ 51% of employers in the service sector have expected that they will have to raise the wages for their employees, 27% said that they will have to employ fewer people. 18% in the service sector have said that they will balance the extra costs with a reward scheme. So what will you be doing this year? A pay rise, a reward scheme or nothing at all?