Wage inflation is on the rise and
a new survey shows the trend is set to continue in a tight labour market
Evidence from today's official labour market statistics show wage inflation
is now on the rise. The trend looks set to continue according to analysis
of preliminary findings from a major new survey examining current recruitment
and retention issues and their consequences.
The survey, commissioned for a conference next month by the Chartered Institute
of Personnel and Development (CIPD), the professional body for all those involved
in people management and development, will examine the recruitment and retention
pressures and challenges that exist in the
current tight labour market and buoyant economy.
These conclusions are supported by the latest labour market statistics for
unemployment, vacancies and average earnings, which show a tight labour market.
Average earnings, including bonuses, are now increasing at an annual rate
of 5.2%.
Findings released early from the CIPD's Recruitment and Retention survey
show:
| • |
Over one third (36.5%) of people management professionals responding
to the survey indicated that they had increased starting salaries or
benefits packages during 2003 in direct response to recruitment difficulties
- compared to 23% in the previous year.
|
| • |
Keeping up with inflation in salaries was also the greatest concern
for 2004 identified by the surveys respondents, with a third (33.6%)
highlighting this in an open question.
|
| • |
Skills shortages - which the CIPD believes are fuelling wage inflation
- were identified by almost another third (32.4%) of employers as the
issue of greatest concern.
|
| • |
Almost a third of employers (32.4%) had also increased pay during
2003 specifically to try and hang on to existing staff, as competition
to recruit makes retention a greater problem.
|
| • |
Organisations from across the public, private and voluntary sectors
are attending the Recruitment and Retention Conference at Olympia next
month to share concerns and discuss ways to minimise the harm to employers
caused by the current recruitment and retention difficulties.
|
Rebecca Clake, Organisation and Resourcing Adviser at the CIPD, said:
"Employers are wrestling with competing pressures. Significant wage
inflation could damage growth in the private sector or the expected service
improvements following government investment in the public sector. However,
recruitment pressures and skills shortages are leaving some employers with
little choice but to raise salaries to attract the best candidates in the
short-term.
"In the medium to long term, investment in the training and development
of existing and new staff can help to reduce these short term pressures on
wages”. Clarke continues, “Employers must also be wary of the
danger of assuming skills shortages exist that affect their individual circumstance.
In many cases, under-utilised skills within the existing workforce can be
developed to meet business objectives."
The CIPD's Recruitment Conference will be held on 23-24 June 2004 at Olympia,
London. Further information about the conference or a copy of the conference
brochure is available by contacting the CIPD enquiry hotline on 020 8263 3434
or visit: http://www.cipd.co.uk/conferences
The Chartered Institute of Personnel and Development (CIPD) has more than
120,000 members and is the leading professional institute for those involved
in the management and development of people.
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