British workers are set to see their take home pay fall next year, while employment growth could also slow, according to new statistics.
The latest analysis by the Chartered Institute for Personnel and Development also found that few employers back a “hard Brexit”, taking the UK out of the Single Market.
Wages are expected fall in real terms, the CIPD said, with predicted median basic pay settlements of 1.1 per cent for 2017 set to be outpaced by inflation.
And similarly, the net employment balance, calculated as the difference between the share of employers expanding and reducing their workforces, also shows a slight decline for the year ahead.
The CIPD said that likely wage growth was limited, in part by firms reluctant to invest in their workers in the face of anticipated cost increases from Brexit.
However, a CIPD survey also found that just 15 per cent of employers said they had started to prepare of restrictions on EU labour.
CIPD labour market analyst Gerwyn Davies said: “Given the current level of uncertainty and the projected increases in costs as a result of a weaker pound, it’s not surprising that employers aren’t currently persuaded to respond to likely controls on migration by investing more in skills.
“However, this will put further pressure on the UK’s productivity growth potential, which is critical to employers’ ability to afford more generous pay increases. Pay expectations are already weak, and as inflation moves up we can expect a period of low or negative real wage growth for the squeezed middle.”
The CIPD also found that just six per cent of firms said they would welcome a “hard Brexit”, taking the UK from Single Market membership to default World Trade Organisation rules, with over half the firms surveyed saying they would favour either existing trading rules, a deal keeping the UK inside the European Economic Area including free movement of labour, or negotiated bilateral free trade arrangements.
A government spokesperson said:
The British economy is fundamentally strong and that is why earnings have grown over the past year, and the economy will continue to be strong as we negotiate our departure from the EU.
The national living wage has given over one million people across Britain a pay rise this year, the biggest wage increase for people aged 25 and over in eight years.