At the end of last year, the Bank of England forecast that 2016 would see UK wages increase significantly. However, due to low inflation, uncertainty about “Brexit” and also the continued impact of low oil process – these estimates are being revised.
More recently the Chartered Institute of Personnel and Development (CIPD) surveyed more than 1,000 human resources staff and employers, whose responses were weighted to reflect Britain’s mix of private, public and voluntary sector employers. At the end of March, CIPD said that UK employers are likely to increase their staff’s average basic pay by just 1.2 percent in the 12 months to 2016.
This is a positive overall picture across all sectors and does not reflect the picture for industries that are linked to oil and gas. In this case commentators Korn Ferry, predict much more conservative increases of 0.6%.
The CIPD report went on to say that “near-zero inflation, greater pension costs, a big rise in the minimum wage and a new government levy to fund apprentices all limited employers’ willingness to offer pay rises.”
Dr Stan Higgins said:
“In NEPIC’s discussions with local employers, this rather pessimistic outlook for salaries is confirmed in the chemical sector for 2016. Several companies indicated that right now, current business uncertainty and poor downstream sector performance, due to a general economic downturn, means that few companies are likely to make any salary increases in 2016.
“During 2015 NEPIC predicted that the initial positive impact of low oil prices for consumers would not continue for the economy as a whole and could eventually lead to an economic slowdown.
“If you add in the uncertainty over “Brexit “ and the fact that the UK has found it difficult to build its exports it only means one thing. Not surprisingly therefore only last week the ONS confirmed that our economy has only grown by 0.3%, the slowest rate since 2012. Consequently it is not surprising that employers are being extremely conservative and cautious over any salary increases this year.”