Pay flat but recruitment up at private sector firms

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Almost a third of private sector firms plan a recruitment drive in the next six months, but wage growth will remain flat, according to CBI Director-General John Cridland.

He warns: "We are seeing very little in the way of wage inflation in the economy. Employers are having to take tough decisions on pay." His comments are based on the results of the latest CBI/Harvey Nash Employment Trends Survey published today.

The research is bad news for public sector workers. While pay freezes across the economy are up from 14 per cent in October to 23 per cent, four out of five public organisations say they are now operating pay freezes.

One small consolation for those public workers facing the axe as part of Government cutbacks, is that recruitment prospects are picking up across the private sector, particularly for professional and highly-skilled staff, with 29 per cent of employers planning to increase permanent recruitment.

John Cridland says: "The pay and recruitment freezes that were commonplace in the private sector during the depths of the recession have now migrated to the public sector.

"However, we remain confident that private sector growth can more than compensate for job losses in the public sector."

However, the companies surveyed warned that public sector workers must be realistic about salary expectations in the private sector. Three-fifths of employers say unrealistic expectations for reward packages could be a barrier to hiring public sector employees.

With pay restraint the norm, 31 per cent of firms are planning a general increase below RPI; 17 per cent are planning targeted increases for some staff only; 20 per cent are planning a general increase in line with RPI and just 4 per cent an above-inflation award.

"With the recovery in its early stages and inflationary pressures a worry, only a quarter of employers can afford to make an award in line with inflation," says Mr Cridland.

"Most are trying to strike a fair balance by offering either modest awards or targeting pay rises on essential staff."