Widening gap on public and private pay deals

After six years “stuck” at 2% in the private sector, the figure is expected to rise to 2.5% amid an increasing shortage of skilled staff, said a report.

But in the public sector, pay rises are expected to fall from 2% to 1.1%, said the Chartered Institute of Personnel and Development (CIPD) and the Adecco Group.

A survey of 1,250 employers indicated that seven out of 10 reported problems filling vacancies.

With inflation forecasts below 2%, workers in private firms are set for a real terms pay rise this year, the report predicted.

Two out of three firms have increased starting salaries in response to recruitment problems, compared with just one in four public sector employers, it was reported.

Jon Boys of the CIPD said: “If we’re to see a sustained improvement to pay we must look at what is preventing individuals from being more productive at work.

“If we can improve how managers train, develop and apply people’s skills at work, our businesses will be much more productive.

“Productivity is 22% lower than it would have been if the pre-financial crisis trend had continued. As a result pay growth is woefully behind.

“While the private sector is more willing to spend money in response to recruitment and retention challenges, the public sector’s hands are tied.

“Employers will need to think far more creatively about how they attract, develop and retain their staff to boost both skills and productivity.”