Wage pressures emanating from the jobs market are set to persist in a sign elevated inflation may stay around for longer, reveals fresh research published today.
Just over 27 per cent of workers in the UK intend to demand a pay rise from their employer over the next year, according to consultancy PwC.
Brits, especially highly-skilled workers, plan to leverage greater bargaining power to secure a wage bump, with around 70 per cent of workers citing an increase in pay as the main driver for changing jobs.
“Highly skilled workers are in hot demand and employers can’t be complacent… Employees will vote with their feet if their expectations on company culture, reward, flexibility and learning are not being largely met,“ Kevin Ellis, chairman and senior partner at PwC UK, said.
Worker shortages are opening up opportunities for workers to switch jobs to improve their career prospects.
For the first time on record, vacancies are greater than the volume of unemployed people in Britain, suggesting firms will have to offer attractive pay packages to lure talent away from rivals.
Historically high inflation is eroding households’ living standards, strengthening incentives for workers to bag a pay rise to ensure their incomes keep pace with price rises.
Figures published by the Office for National Statistics (ONS) last week revealed living costs climbed nine per cent last month, the quickest acceleration since 1982.
Regular pay netting off inflation is falling at the quickest rate in nearly a decade.
The Bank of England has warned swelling wages that are not accompanied with productivity gains risks embedding elevated prices in the UK economy.
Steeper inflation expectations can trigger a wage/price spiral, which sees workers demand higher pay, raising firms’ costs and strengthening incentives for them to increase prices, creating an inflationary feedback loop.
PwC’s research illustrated historic levels of labour market churn will continue this year.
Around one in five workers plan to quit their job this year, the firm said. The ONS said last week nearly 1m switched jobs in the three months to March, mainly driven by resignations rather than dismissals.