CIPD predicts continued squeeze on living standards

 

There’s little light at the end of the tunnel according to CIPD’s annual labour market predictions.

The professional body for HR and people development is predicting that pay, productivity and migration will all remain stressed well into 2018 as the UK progresses its exit from the European Union.

Their predictions specifically point to a tightening of the labour market and continued poor productivity.

The pressure on the cost of living increased consistently throughout 2017 and the CIPD predicts that the only route to meaningful wage increases in 2018 would be through falling inflation, that increased constraints on the labour supply mean the UK could run out of people to fill jobs, and productivity will remain well-below pre-crash levels.

Ian Brinkley, CIPD Acting Chief Economist, concludes that while 2017 ended with more people in work than ever before, the signs point to peak employment. ONS figures also indicate constraints in the supply of labour.

Until now, labour has been supplemented through net migration, which has helped drive growth in the UK workforce. With net migration falling post-referendum, the signs point to a slow and steady decline. Sectors such as hospitality and agriculture, heavily reliant on migrant labour, will be watching negotiations closely.

Ian anticipates a flattening of employment growth and weak pay growth as the UK continues to struggle with its productivity problem. The national minimum wage will see some workers get an uplift, however most employers can’t or won’t make an above-inflation pay rise.

He said, “In 2017 we saw record-high employment but a big squeeze on household budgets; the next 12 months looks to be a case of more of the same. With Brexit negotiations entering their next crucial phase, all eyes will be on the ability of the Government to ensure employers can access the skills and workers the economy needs. Workers will also be hoping that pay rises faster than inflation, but that may not happen until much later in the year.”

The CIPD also concludes that there is no long term productivity recovery underway, despite better than expected figures in the last quarter, and recommends that Government investigate the underlying causes to avoid low-productivity becoming a long term problem.  That includes exploring way many UK organisations invest less in training and improving people management than their international counterparts.

 

Thursday, 4 January 2018

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CIPD predicts continued squeeze on living standards