Expected pay awards for workers in the North are set to hit new highs in the coming year, according to the CIPD’s latest Labour Market Outlook report. The expected median basic pay increase stands at 5% in the North, compared with 4% for the UK overall, the largest UK pay increases recorded by the CIPD since 2012.

However, with inflation already hitting 10.1%, this will still feel like a pay cut to most. In response, the CIPD - the professional body for HR and people development - is calling on employers to look at other means beyond pay that can support employee financial wellbeing and improve job quality in the current cost-of-living crisis.
 
The report - which surveys over 2,000 senior HR professionals and decision-makers in the UK – found that close to half of employers (47%) in the North feel their workers financial situation will worsen somewhat over the coming 12-months.

To help workers and reduce the impact of the cost-of-living crisis, over the past 12 months, close to a third (30%) of employers in the region have increased flexible working arrangements, whilst 37% have increased wages.

Jobs boom still hasn’t peaked in the North

The report found that the jobs boom in the North has yet to reach its peak. Employers’ intentions to hire in the next quarter remain high, with seven in ten (68%) employers in the region expecting to recruit in the next three months.

However, despite this demand, over a third (44%) of employers in the North are struggling with hard-to-fill vacancies, and of those, more than half (56%) expect the number of hard-to-fill vacancies to keep increasing. The top response from employers has been to raise wages (54%), upskill existing staff (40%), followed by improving job quality (30%).

Cost-of-living affecting businesses

With rising costs affecting businesses too, employers in the North were split over their ability to support their employees’ financial wellbeing in the next 12 months. Over a quarter (29%) felt either confident or very confident they could meet this challenge, but (25%) felt less confident, 32% were neutral and 14% did not know.

Jon Boys, labour market economist for the CIPD, said: 

“The cost-of-living crisis is one of the biggest challenges facing employers today. Organisations are looking at how they can support their people while also battling rising operational costs and a tight labour market. Pay awards are expected to rise at the highest increase we’ve seen in our survey for ten years but it’s being outpaced by rising prices. Rather than feeling the benefit of higher pay, most will face a real-terms pay cut.

“Securing talent remains a pressing concern for organisations but it’s positive to see that many employers are looking at non-financial measures such as flexible working and job quality to attract, retain and support employees.”

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