Half of firms planning pay rises of over 2% this year

Many employees will see an increase in their total pay this year, according to a survey by the British Chambers of Commerce (BCC) and online recruitment company Indeed.

The survey of 1,020 UK businesses of all sizes and sectors found that 6% of firms will increase pay by more than 5% and almost a third (32%) will award pay rises of 2-5%. Another 12% plan to increase pay in line with consumer price inflation, and 18% by 1-2%.

The findings follow the government announcement of pay increases for more than one million public sector workers, including teachers, doctors, prison officers, police and the armed forces.

Separate research from the Resolution Foundation suggests that job movers are benefiting most from pay growth, with a ‘disloyalty bonus´ for those switching jobs.

Nominal pay growth for people who moved jobs in the last 12 months reached 11% earlier this year — its highest level since the early 2000s. Meanwhile, pay growth for the vast majority of workers who stick with their employer remains around 2.5% — well below the pre-crisis average of over 4%.

But despite the growing pay premium for moving jobs, only 3% of workers have done so in the last 12 months.

“Young workers in particular seem reluctant to make the move,” said Stephen Clarke, senior economic analyst at the Resolution Foundation.

Welcoming the prospect of across-the-board pay rises over the next year, Tara Sinclair, senior fellow and economist at Indeed, said: “These figures suggest brighter times are ahead for workers who, after seeing their wage growth barely exceed inflation, could receive a meaningful pay rise. Couple these findings with the recent public sector pay hikes and it appears organisations are feeling more confident despite continued uncertainty. The question now is will they raise wages enough to continue to outpace price rises?”