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Recruitment and HR Blog

CIPD warns pay rises in 2016 set to be lower than official forecasts

5th January 2016

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The Office for Budget Responsibility (OBR) and the Bank of England has forecast average earnings growth will be around 3.5% in 2016, but Mark Beatson, chief economist at the CIPD, described this as “very optimistic”.

According to the CIPD, pay expectations for the year ahead will actually centre on a 2 per cent increase, but as inflation is also expected to remain low, most workers will still feel better off.

While the introduction of the compulsory national living wage for over 25s might push up the official figures for average earnings, Beatson said other cost increases in the labour market, including the apprenticeship levy and increased pensions costs, “will potentially restrict the ability of employers to afford significant pay rises”.

The government’s national living wage of £7.20 - set to come in this April, rising to £9 by 2020 - has been criticised for not accurately reflecting the cost of a decent standard of living for a full-time worker. The Living Wage Foundation (LWF) has calculated that a more accurate ‘living wage’ stands at £9.40 for London and £8.25 for the rest of the UK.

If you’re an employer, will the introduction of the Living Wage affect your business?

Drop us an email at or give us a call on 0844 967 4467.

Source; Published; 05.01.16

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