Salaries Set to Rise

Evidence from today's official labour market statistics show wage inflation is now on the rise. The trend looks set to continue according to analysis of preliminary findings from a major new survey examining current recruitment and retention issues and their consequences.

The survey, commissioned for a conference next month by the Chartered Institute of Personnel and Development (CIPD), the professional body for all those involved in people management and development, will examine the recruitment and retention pressures and challenges that exist in the
current tight labour market and buoyant economy.

These conclusions are supported by the latest labour market statistics for unemployment, vacancies and average earnings, which show a tight labour market. Average earnings, including bonuses, are now increasing at an annual rate of 5.2%.

Findings released early from the CIPD's Recruitment and Retention survey show:

• Over one third (36.5%) of people management professionals responding to the survey indicated that they had increased starting salaries or benefits packages during 2003 in direct response to recruitment difficulties - compared to 23% in the previous year.



• Keeping up with inflation in salaries was also the greatest concern for 2004 identified by the surveys respondents, with a third (33.6%) highlighting this in an open question.



• Skills shortages - which the CIPD believes are fuelling wage inflation - were identified by almost another third (32.4%) of employers as the issue of greatest concern.



• Almost a third of employers (32.4%) had also increased pay during 2003 specifically to try and hang on to existing staff, as competition to recruit makes retention a greater problem.



• Organisations from across the public, private and voluntary sectors are attending the Recruitment and Retention Conference at Olympia next month to share concerns and discuss ways to minimise the harm to employers caused by the current recruitment and retention difficulties.

Rebecca Clake, Organisation and Resourcing Adviser at the CIPD, said:

"Employers are wrestling with competing pressures. Significant wage inflation could damage growth in the private sector or the expected service improvements following government investment in the public sector. However, recruitment pressures and skills shortages are leaving some employers with little choice but to raise salaries to attract the best candidates in the short-term.

"In the medium to long term, investment in the training and development of existing and new staff can help to reduce these short term pressures on wages”. Clarke continues, “Employers must also be wary of the danger of assuming skills shortages exist that affect their individual circumstance. In many cases, under-utilised skills within the existing workforce can be developed to meet business objectives."

The CIPD's Recruitment Conference will be held on 23-24 June 2004 at Olympia, London. Further information about the conference or a copy of the conference brochure is available by contacting the CIPD enquiry hotline on 020 8263 3434 or visit: http://www.cipd.co.uk/conferences

The Chartered Institute of Personnel and Development (CIPD) has more than 120,000 members and is the leading professional institute for those involved in the management and development of people.