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15.02.16

Public sector pay rises remain low, but employment rates have improved – CIPD

Public sector pay rise rates remain low but employment rates have improved, according to new research.

The latest quarterly Labour Market Outlook (LMO) Survey report from the Chartered Institute of Personnel and Development (CIPD) shows that median basic pay expectations for wage growth in winter 2015-16 are at 1% in the public sector, compared to 2% in the private sector, and expectations in both sectors have remained stagnant for the past three months.

The three biggest reasons given by employers for not increasing basic pay by more than 2% were the organisation’s inability to pay more (36%), restrictions on public sector pay (30%) and absorbing the cost of the introduction of the auto-enrolment pensions scheme and the current official rate of inflation (17% each.) The increase in National Minimum Wage in October was also given as a reason by 14%.

Gerwyn Davies, CIPD labour market analyst, said: “The feedback we’re seeing from employers suggests that official forecasts for wage inflation for 2016 are too optimistic.”

In December, over one million council employees received a pay rise offer of 1% a year for the next two years.

The net percentage of recruitment and redundancy intentions in winter 2015-16 was -7% in the public sector, compared to 30% in the private sector.

However, recruitment rates in the private sector had dropped from 41% in the previous quarter, whereas recruitment rates in the public sector had remained stable as a part of a steady increase.

The survey also found that 80% of public sector employers plan to hire staff, a 5% increase over the past three months, compared to 65% in the private sector. However, 20% of private sector employers plan to carry out redundancies compared to 28% of public sector employers.

The latest LMO results were based on a YouGov survey of 1,007 HR professionals and employers between 4 and 24 December 2015, of which 73% were private sector employers, 21% were public sector and 6% were voluntary sector.

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