The industry body’s Labour Market Outlook, released today (13 January) attributed the strong growth in pay rates to the tight labour market and high inflation.
The UK labour market:
Growth in pay was significantly stronger in the private sector, which at a median of 5% was far ahead of median public sector raises of 2%.
Jill Cotton, career trends expert at Glassdoor, told HR magazine that increased pay would be a welcome relief for many.
She said: “Salary remains the number one consideration across job hunters of all ages looking for a new role and companies who are transparent about pay will find it easier to attract talent.”
More than two thirds (71%) of employers said they expected to hire in the next three months, with expected redundancies below pre-pandemic levels, tightening the labour market further, according to the report.
Jonathan Boys, CIPD senior labour market economist, said the number of employers looking to fill vacancies was exceptionally high.
He told HR magazine: “Combined with low redundancy intentions this shows that employers are looking to grow their workforces. Things are still red hot.”
With talent in short supply, however, employers may continue to find it difficult to attract candidates, he added.
“The talent pool is a talent puddle right now. Unemployment is low so there are fewer people out of work and looking. Inactivity is up as there are more people retiring and studying meaning the workforce is actually about 200,000 people smaller than pre-pandemic.
“Employers are having to look further afield and consider what may be untraditional employee groups. To do this well they should think about job design and creating good work which suits the preferences of a wide number of people. Flexibility is key here.”
Yet Cotton warned an increase in pay will not be enough to retain employees on its own.
She said: “Once in a role the culture and values of a company, the strength of senior leadership and access to learning and development are the key drivers of employee satisfaction – compensation drops to the bottom of the list. [...]
“Companies should look to broaden their usual talent pools by considering alternative work experience and recognising the value of transferable soft skills to help fill the skills gaps so many sectors in the UK are facing.
“Investment in mentorship and creating upskilling opportunities will not only help employers keep hold of their workers, but also create a loyal workforce as satisfied workers stay longer.”