Danny McCance 19 Dec 2017 02:45pm

Businesses to raise wages past inflation in 2018

Businesses in the UK will look to retain talent in the new year, with 52% saying they would increase wages in line with, or higher than inflation

This has dropped from 57% who said they would do the same in 2016, according to a joint survey from the Confederation of British Industry (CBI) and recruitment agency Pretemps.

Half of firms (51%) also plan to grow their workforce in the coming year, with confidence highest among mid-tier firms at 58%.

The priorities for businesses in 2018 are achieving and maintaining high levels of employee engagement (46%), and improving leadership skills (44%) and retaining talent (35%).

“Living standards have been squeezed in 2017 because of higher inflation,” said Matthew Percival, head of employment policy at CBI.

“Higher productivity is the only sustainable way to increase pay, so it is rightly the focus of business and the government through the industrial strategy,” he added.

Those surveyed were also concerned about national living wage, with the number of employers affected rising from 50% last year to 55% this year.

Almost two-thirds (63%) found it an increasing challenge for in relation to costs – up from 59% last year.

There was also concern among business over the state of the UK labour market, as 63% feeling that changes to the UK labour market will cause the UK to be less attractive for investments – up from 50% last year and 25% the year before.

“With businesses already worried about future access to skills and labour, the worst thing we could do would be to undermine the many EU nationals already here and contributing to our businesses and public services,” said Neil Carberry, managing director for policy at CBI.

“Last week’s Brexit deal is a good outcome if a final deal is reached, but the government must be clear that the position of EU nationals already in the UK is secure in all scenarios.,” he added.

Research last week found that 10,500 individuals in the financial services sector could see their jobs moved out of the UK, as 68 firms already confirm their intentions to relocate.