LONDON (Reuters) – British employers are offering annual pay settlements worth an average increase of 2.8% to staff, well below the rate of inflation, a survey showed on Monday.
The Chartered Management Institute said many businesses were wary of offering pay rises when other costs were soaring and some feared that consumer demand would soon falter.
“We’ve not really seen the full effects of the Ukraine conflict filter through yet, and it’s clear that pressure is mounting across the board and there are undoubtedly some rocky times ahead,” Anthony Painter, the CMI’s director of policy, said.
Pay settlements in the private sector averaged 3.2%, compared with 2.4% in the public sector, the CMI data showed, roughly in line with other similar surveys.
While bigger pay rises would help ease the cost of living squeeze being felt by most British workers, the Bank of England is concerned that hefty pay rises could make it harder to get inflation back to target.
Consumer price inflation hit a 30-year high of 7.0% in March, and some economists think it could reach double digits later this year.
The BoE’s own survey of employers pointed to pay settlements of almost 5% this year, far higher than the usual trend.
So far there has been little sign of increases on that scale.
Last month, pay data company XpertHR said the average award in the three months to the end of February was 3%, the joint-highest since 2008.
Three percent was also the average pay rise that businesses planned for 2022 as a whole, the Chartered Institute of Pay and Development (CIPD) said.
Average annual wage growth excluding bonuses — which unlike pay settlement data includes raises due to job moves and promotions — was 4.0% in the three months to February, according to official data published last week.
The CMI survey showed only about half of firms surveyed between March 31 and April 5 had definitely decided to raise pay this year, with 48% either deciding against a raise or unsure.
By contrast, the XpertHR and CIPD surveys have previously shown less than 10% of employers intended to freeze pay.