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UK Economy
More jobs on way amid pay rise caution
From the Financial Times of Mon, 22 Dec 2014 00:01:52 GMT
Confederation of British Industries (CBI) Chief Policy Director Katja Hall attends a media briefing in London March 8, 2013. REUTERS/Neil Hall (BRITAIN - Tags: BUSINESS HEADSHOT PORTRAIT) - RTR3EQJD©Reuters

Katja Hall

Employers plan to hire more staff in every region of the UK next year but they are still cautious about pay, with only a small minority offering above-inflation wage rises.

The CBI business lobby group’s annual survey of 323 companies — employing about 1.25m people in all — suggests that Britain’s jobs boom will continue next year, but that any recovery in workers’ real wages will be a slow process.

Half the companies surveyed said their workforces would be bigger in a year’s time, while 12 per cent said they would be smaller. There was a similar balance of responses in last year’s survey and, since then, the unemployment rate has tumbled from 7.4 to 6 per cent.

In a sign of increasing confidence, companies plan to hire more permanent staff than temps next year and also expect to take on more graduates, young people and apprentices. Katja Hall, the CBI’s deputy director-general, said these responses showed “the recovery is bedding in effectively”.

Real wages have started to rise slightly in the UK after the longest and steepest fall on record, but Ms Hall said it was “fair to say companies are still taking quite a cautious approach” to pay.

About 43 per cent of respondents said they planned to increase pay in line with the retail price index in their next pay review, about the same proportion as last year. Around 12 per cent planned to offer more than RPI, a higher proportion that last year, and about 23 per cent planned to give less than RPI or to freeze pay altogether, down from 31 per cent last year.

RPI, an inflation measure that is no longer considered a “national statistic”, was 2 per cent in October, compared with 1 per cent for the consumer price index. CPI is usually the figure most economists compare with pay when they want to calculate real wage growth.

The CBI said low productivity growth was one reason for employers’ caution on pay, together with a new legal duty to enrol all workers over the age of 21 and earning more than £833 a month into a workplace pension scheme, and a recent Employment Appeal Tribunal ruling that will require businesses to give workers more holiday pay.

For the first time since the question was asked in 2011, the biggest concern for employers was “low levels of skills in the workplace”. Over the past year, a broad consensus has emerged between corporate leaders and trade unions that UK businesses need to spend more on training and better apprenticeships if the UK is to rectify its poor productivity performance.

Only 10 per cent of UK employers employ apprentices, compared with three to four times that proportion in Austria, Germany and Switzerland. Employers spent about £43bn on training last year — £2.5bn less than in 2011.

Employers’ other big concern was that politicians would introduce new regulations in response to public concern about the growth of low-wage work and “zero hours” contracts, which do not guarantee employees any minimum working hours.

“It does feel we’ve had quite a political debate about the UK’s flexible labour market . . . and business leaders are worried the next government would be tempted to interfere,” said Ms Hall.

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