UK public sector to lead in pay rise

The UK public sector is expected to see stronger pay rise than the private sector for the first time since late 2020, following new pay rises approved by the Labour government.

A survey by the Chartered Institute of Personnel and Development found (CIPD) that median expected pay hikes for public-sector employees jumped from 2.5 per cent to 4 per cent for the coming year, surpassing the private sector’s 3 per cent median. Public-sector employers predict short-term increases of up to 5 per cent in new pay settlements.

Finance Minister Rachel Reeves recently implemented substantial tax hikes, including £25 billion in employer social security contributions and a 6.7 per cent rise in the minimum wage.

While public-sector workers gain from pay awards, CIPD economist James Cockett noted private businesses could face higher operating costs, impacting hiring plans and wage increases. The Bank of England, monitoring wage growth to assess inflation pressures, recently lowered its bank rate to 4.75 per cent, signalling gradual rate adjustments ahead.

Attribution: Reuters

Subediting: M. S. Salama