17 May 2017

A survey of employer intentions has found that living standards will continue to fall for the average UK worker, with basic pay growth expectations slipping to 1% compared with 1.5% three months ago.

This is according to the latest Labour Market Outlook survey by the Chartered Institute for Personnel and Development (CIPD) and The Adecco Group, which asked over 1,000 employers about their intentions over the next 12 months.

Pay growth expectations are now the lowest they have been over the past three and half years at a time when inflation is seen rising, putting at risk the basic quality of life of workers across the UK.

"This could create higher levels of economic insecurity and could have serious implications for consumer spending, which has helped to support economic growth in recent months," Labour Market Adviser at the CIPD Gerwyn Davies warned.

Regular readers will not be surprised as the new statistics, as they follow a trend of decreasing real wages seen in recent years.

The CIPD pointed to employers' reluctance to invest in their workforce as a key driver for the continued decline in pay growth and the general lack of productivity seen across the UK economy.

Indeed, while recruitment intentions increased across the UK, 56% of employers said they have difficulty filling vacancies, and of these only 18% said they fund any training activity, while only one in five said they do not plan to adopt any measures to upskill their staff.

"The weak pay data is no surprise given the continued weak productivity growth in the UK. However, this is being exacerbated by many employers’ passive attitude towards workforce development and training, despite reporting hard-to-fill vacancies ... It's crucial therefore that we see a pick-up in employer investment in workforce skills development to support and sustain productivity growth," Davies added.

Indeed, this is far from a contentious point of view in today's economic climate, with experts from Theresa May's job tsar Matthew Taylor to academics to the Office for National Statistics highlighting the link between a business culture that discourages investment in training the workforce and creating high-skilled jobs with the UK's record low productivity gap compared with our major G7 competitors.

The Institute of Employment Rights argues that this culture is driven by the shape of employment law itself and reforms to legislation could incubate a new way of working in the UK.

In our Manifesto for Labour Law, we put forth that the law currently encourages businesses to compete on a race to the bottom on workers' rights rather than investing in improvements to the quality of their products or services, or into upskilling their workforce.

By changing the law to promote a stronger workers' voice in the workplace, staff can protect their pay and conditions, preventing employers from trying to compete by stripping away their salaries and job security, and thus incentivising them to focus on other factors such as training, research and development.