UK workers
Pay growth in the UK is lagging behind inflation Reuters

UK employers expect to raise the pay of workers by just 1% on average over the next 12 months, a new survey suggests.

A report commissioned by the Chartered Institute of Personnel and Development (CIPD) and the Adecco Group said wage growth was weak due to an increase in labour supply over the past year.

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This was driven by sharp rises in the number of workers arriving from the European Union, as well as by former welfare claimants and older people joining the work force.

The poll of more than 1,000 employers revealed that there were 24 applicants for every low-skilled job across the UK, compared with 19 candidates for every medium-skilled job and eight applicants for every high-skilled job.

"Predictions of pay growth increasing alongside strong employment growth is the dog that hasn't barked for some time now, and we are still yet to see tangible signs of this situation changing in the near-term," said Gerwyn Davies, senior labour market analyst for the CIPD.

"The facts remain that productivity levels are stagnant, public sector pay increases remain modest while wage costs and uncertainty over access to the EU market have increased for some employers."

Employers in the private sector said they expected to raise pay by 2% on average over the next 12 months, while those in the public sector said they planned to offer a 1% increase in wages.

Private sector firms cited the National Living Wage, uncertainty over access to the single market and the government's auto-enrolment pension scheme among the factors acting as drags on wage growth.

Alex Fleming, president of general staffing at Adecco, said: "Continued subdued wage growth that the labour market is currently facing is a real issue that employers need to tackle head on.

"Employers must to invest in staff to increase productivity, thus in-turn providing them with the opportunity to increase wage growth."