Over half of UK businesses set to increase wages in 2014 – increasing inflationary pressure
The Barclays Employers Survey 2014, which questioned 684 UK businesses, has revealed that 57% of businesses are planning to increase wages in the year ahead, with 39% planning to increase them for their entire workforce.
Despite rising living costs, the majority of respondents (52%) also said that wage pressure from employees wasn’t an issue, whereas 30% said it was a concern to some extent and 17% said it was a major concern.
Kevin Wall, co-head of Corporate Banking Origination, Barclays, said: “After an extended period of wage freezes, which have been tough for employees, it’s good to see that so many employers will be increasing wages in the coming year. This can only have a positive impact on employee morale. However, it will increase inflationary pressure as the year progresses.”
Prior to last week’s falling unemployment announcement, only 14% of survey respondents thought that unemployment levels would fall sufficiently to trigger an interest rate rise this year. Almost a third (32%) thought it would be in 2015 and 44% of the largest companies surveyed thought it would be 2016 or later.
Kevin Wall added: “Whilst no one knows when interest rates will rise, businesses should not be complacent. It would be prudent for firms to ensure they have sufficient cash flow to absorb the increase when it comes.”
A key focus for Government – apprenticeships – also seems to be getting traction, as employment of apprentices is on the rise, with 29% of businesses saying they took them on in 2013 and the same amount planning to take them on in 2014. This is an increase from last year’s survey, when 22% had taken them on in 2012, and 27% were planning to take them on in 2013.
Additional findings:
– A third of respondents (33%) think the Eurozone crisis is behind them. Nearly half (47%) say it’s neither any worse nor any better, while 16% think it’s ahead of them.
– 71% of businesses still believe sales increases lead to job creation, rather than believing job creation can drive sales, however this is a downward trend over the past four years (2013: 73%, 2012: 77%, 2011: 78%).
– Zero hour contracts have been the topic of much debate, and Barclays’ survey shows that the vast majority of businesses (82%) won’t be creating them this year, although 13% plan to – with the Healthcare and Facilities Management sectors most likely to do so (both 23%).
– The largest companies are most likely to create zero hour contracts, with 35% of them saying they intend to.
