The latest quarterly Labour Market Outlook from the Chartered Institute of Personnel and Development (CIPD) found that more than half (55%) of employers expected to make increases to base or variable pay in the next year.
The reasoning behind this was to better recruit or retain staff during a difficult period. The majority (71%) expected to make new hires over the next three months, while 57% reported dealing with hard-to-fill vacancies. The majority also expected this issue to persist to either a significant (29%) or minor (36%) extent over the next six months.
Overall, the median base pay rise expectation among employers for this year was 5%, although those in the public sector lagged at 2%.
Almost three-fifths (57%) of organisations suggested that pay rises would be funded by raising prices, compared with 47% which planned to absorb the costs.
In order to address talent shortages over the past six months, employers have upskilled existing staff (47%), raised wages (43%), increased the duties of existing staff (36%), or improved job quality (27%). Increasing the duties of existing staff was more prevalent in sectors facing strike action, such as education (43%) and healthcare (40%).
More than a third (36%) planned to focus more on recruiting people returning to work after a career break, such as for childcare or health reasons, compared with 29% who stated they had done so in the past three years.
Jon Boys, senior labour market economist for the CIPD, said: “Skills and labour remain scarce in the face of a labour market which continues to be surprisingly buoyant given the economic backdrop of rising inflation and the associated cost-of-living crisis.”
He added: “Many employers are recognising the potential to attract certain groups to fill vacancies – particularly older workers, carers and those with health conditions – but this also requires a focus on improving job quality, particularly flexibility.
“The forthcoming introduction of a day one right to request flexible working should prompt more employers to ensure that they advertise jobs as flexible and provide a range of flexible working practices to attract and retain a more diverse workforce.
“However more needs to be done to help provide employers, particularly SMEs, with access to occupational health services or support, to help them to keep our ageing workforce healthy and in work.”
Miranda Kyte, careers advice expert at Glassdoor, told Benefits Expert that those organisations simply planning to expand the duties of existing employees could be heading for greater issues down the line.
She said: “Employers can’t simply expand roles and walk away… employers need to put in place the right support so workers can thrive with the new responsibilities. Without this, companies run the risk of causing burnout amongst their workers.”