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Expectations for public sector pay rises have hit their highest level in more than a decade as a shortage of skilled workers continues to drive up wages.
Public sector pay expectations have jumped from 3.3pc to 4pc in the last three months, according to the Chartered Institute of Personnel and Development (CIPD), reaching the highest rate since 2012.
CIPD’s labour market outlook report, which is a quarterly survey of 2,000 companies in the UK that are hiring, found that employers across the economy continue to come under pressure to boost wages.
Private sector bosses expect to hand staff average salary uplifts of 5pc over the next year, down only slightly from growth of 7.7pc in the three months to May.
Expectations for continued strong wage growth comes despite inflation easing to a 16-month low in June, with forecasts that new data this week will confirm another fall in July.
CIPD’s findings are likely to worry the Bank of England. Andrew Bailey, the Governor of the Bank of England, has blamed “unsustainable” pay rises for stoking inflation and warned that pay “cannot continue” going up at its current pace if inflation is to fall.
Earlier this year Mr Bailey was criticised for suggesting that workers should not ask for a pay rise over fears it would drive up prices.
The CIPD report found that employers were being forced to offer strong pay increases in the face of skills shortages and near full employment. Employers are regularly making counteroffers to staff that consider leaving in a bid to hang on to talent, it found.
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