Salary growth in the UK has slowed to its weakest pace in over three years, with business hiring intentions dropping to their lowest level since the COVID-19 pandemic, according to new surveys released on Monday.
The Chartered Institute of Personnel and Development (CIPD) reported that just 57 per cent of private sector employers plan to recruit staff in the next three months, the lowest figure since early 2021 and down slightly from 58 per cent in the previous quarter.
Costs, Regulation, Demand Impact Hiring
According to the CIPD report, rising employer social security charges introduced by Finance Minister Rachel Reeves and an increased minimum wage were weighing heavily on jobs, especially in hospitality and social care. Planned changes to employment law, expected to make it harder to dismiss employees in their first two years, were also deterring companies from hiring younger, less experienced staff, CIPD economist James Cockett said.
Weak domestic demand, uncertainty over U.S. trade tariffs for exporters, and lingering global headwinds have further dampened business confidence.
Pay Growth Stalls
CIPD members forecast median pay growth of 3 per cent over the next year, unchanged for the fifth consecutive quarter. Separately, the Recruitment and Employment Confederation (REC) said July’s growth in starting salaries was the slowest since March 2021, while pay for temporary staff rose at the weakest rate in five months.
Jon Holt, CEO of KPMG, which sponsors the REC survey, cited “economic uncertainty, the complexities of AI adoption and global headwinds” as factors weighing on business planning.
The data comes as the Bank of England monitors the labour market for signs of easing inflationary pressures. Official figures due Tuesday are expected to show unemployment holding at 4.7 per cent in the three months to June, near a four-year high. Four of the BoE’s nine policymakers opposed last week’s quarter-point rate cut to 4 per cent, signalling they need more evidence of cooling wage growth before easing further. (Inputs from Reuters)
