UK recruiters plan record pay rises but real wages lag inflation, survey shows

British employers are planning the biggest pay hikes in a decade to fill roles but real-term wages will still grow more slowly than inflation, a survey showed on Monday.

The quarterly survey by the Chartered Institute of Personnel and Development (CIPD) found employers expect to raise their basic pay rates by 4% on average over the coming year, and by as much as 5% in the private sector - the largest since the CIPD's records started in 2012.

"Pay awards are expected to rise by the highest amount we've seen in our survey for 10 years but it's being outpaced by rising prices," CIPD labour market economist Jon Boys said. "Rather than feeling the benefit of higher pay, most will face a real-terms pay cut."

The figures add to concerns from the Bank of England about an overheating labour market and historically rapid wage gains, which many of its officials fear could fuel further inflation that currently stands at a 40-year high of 10.1%.

Britain's jobs boom has yet to peak, with 69% of employers planning to hire in the next quarter, the CIPD said.

Hiring intentions were the strongest in the public sector with 80% of respondents planning to recruit. That stood at 74% in the voluntary sector and 66% in the private sector.

However, nearly half of employers said they were struggling with hard-to-fill vacancies, and 53% expect of those employers expected these difficulties to increase in the next six months.

Raising pay was becoming a less common solution to worker shortages. Just 24% of employers intended to raise wages in response to hard-to-fill openings, down from 44% who increased pay for this reason in the previous six months.

Instead, 47% of employers with labour shortages were trying to train up existing staff.

Some 12% of employers said they had offered all their staff a one-off payment to cover the rising cost of living, and a further 10% offered one to some of their workers.

"Organisations are looking at how they can support their people while also battling rising operational costs and a tight labour market," Boys said.

The CIPD surveyed 2,018 employers between Sept. 16 and Oct 16.