Pay rises to average 2% in coming year

Employers are expecting to hand out average pay rises of 2% in the coming year.

Excluding bonuses, respondents planning a pay review over the year to June 2016 expect to give a median pay award of 2%, according to the Chartered Institute of Personnel and Development (CIPD).

Its quarterlyLabour market outlook report, which surveyed 931 employers, also found that one in five plan to give a basic pay increase of 3% or more in their next pay awards.

The report’s main findings are:

• respondents in the private sector anticipate median pay increases of 2% in the year to June 2016, while rises of 1% and 1.5% are expected in the public and voluntary sectors, respectively;

• the 2% median increase is up from 1% forecast in the CIPD’sLabour market outlookreport, published in May;

• seven out of 10 (71%) had conducted a basic pay review in the 12 months to June 2015, but around a quarter (24%) had not done so;

• 39% of respondents cite the ability to pay more as a key reason for the expected 2% pay award, while 30% list movement in market rates as a key factor; and

• around a quarter (26%) say that employee productivity and performance are key factors behind employers’ decision to award a pay increase of 2% or more, and 26% cite recruitment and retention issues.

www.cipd.co.uk/hr-resources/survey-reports/labour-market-outlook-summer-2015.aspx