CIPD: Post-budget pay increases for public sector workers

According to the CIPD, public sector pay increases have now surpassed private sector increases for the first since Autumn 2020.

In just three months, the latest Labour Market Outlook revealed that the public sector had gone from having the lowest median wage awards (2.5%) to the highest (4%).

The CIPD has said that the next quarter will bring even higher awards of 5% in the public sector.

Comparatively, the private sector is likely to award 3% of its total budget over the next 12 months and the following three.

The CIPD describes this as a “bounce-back” in the public sector after elections, which also reflects on recruitment confidence.

The net employment balance in the public sector, which measures employers’ expectations to increase staff levels over the next three-month period, has increased from -1 up to +6.

The net employment balance for the overall economy meanwhile increased from +18 up to +21.

James Cockett said that the increase was a “welcome boosting” for public sector workers and employers.

He said that the money would help to support the NHS in the short-term and provide other important public services.

“However improvements in people management capabilities and technology adoption will need to be made to raise efficiency within the public sector, to respond to the rising demand for services and the spending constraints on the long-term.”

The private sector, on the other hand, is likely to experience “downward pressure” after the Budget announcements, which include increases in employers’ national security contributions and national minimum wage.

He added that “these increased costs will likely act as a growth barrier and may lead employers to offer lower pay increases, be more cautious in investing in worker’s skills or hiring new staff.”

Raising productivity is key. The government must set out how it plans to work with employers in order to improve wages, living standards and productivity across the economy. This will be done through the industrial strategy, and by making changes to policy areas such as skills and innovation.

Construction, care, social work, and other healthcare roles scored highest at +43, reflecting the confidence of the public sector.

Only a little over a third (35%) of employers in Outlook report hard-to-fill positions, with 42 % in the public sector.

The CIPD looked at the plans of employers to hire people from underrepresented or disadvantaged groups. Comparing smaller employers to larger employers, one in five (21%) said that they did not plan to hire from under-represented groups or were unlikely to do so over the next 3 years.

The CIPD reported that only 13% of small private businesses plan to hire individuals with a long-term disability or disability in the next 3 years, compared to 42 % of large private sector employers and 43 % of public sector employers.

Ben Willmott is the head of public policy for the CIPD. He said that the Budget and Labour’s Plan to Make Work Pay will have a “significant impact” on the growth and hiring plans of employers, which could undermine efforts to improve labour participation.

He added that “our data show it is important for the Government to consider how they can provide enhanced support to SMEs who are already reluctant to hire people from disadvantaged group.”

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