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Low productivity holding back wages, says CIPD


A failure to bring workplace productivity back to pre-recession levels is causing slower growth in average salaries, according to a report by the CIPD.

The CIPD Labour Market Outlook for the second quarter of 2014 is based on a survey of more than 1,000 HR professionals and employers. It suggests that output for hours worked is still 4% lower than 2007.

Only 2% of employers have reported a significant increase in starting salaries.

Pay for existing employees is also growing relatively slowly. The median pay increase for the year is 0.7% up from 2013 levels. This compares to a pre-recession increase of 2.5% from the equivalent 2007 report.

Of those workers who have received a pay rise, the median increase is 2% – down from 2.5% in 2013. The figure stands at 1% for employers in both the public and voluntary sectors.

The number of businesses that intend to freeze pay in the second half of 2014 has also increased slightly – up from 8% in 2013 to 10% this year.

CIPD chief economist Mark Beatson called for a focus on increasing productivity to drive up wages during the economic recovery.

"We urgently need to see jobs growth accompanied by productivity growth for workers to feel the benefits of the recovery too," he said. "This would help place it on a more balanced and sustainable footing and create the economic headroom for real wage increases.”