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Pay rise split creates ‘two-tier workforce’, finds CIPD

Some employers risk being left behind as CIPD finds pay gap between those receiving raises and those seeing freezes and cuts

A SCHISM is appearing in the UK employment market as a significant portion of employers are forced to freeze or cut pay, while others are able to increase remuneration by 2% or more, the Certified Institute of Personnel Development has found.

According to the institute, 42% of UK employees received no wage increase in 2014. Almost two-fifths faced pay freezes last year, while 3% of the UK workforce had their pay cut.

A similar proportion – around 40% – have received a pay increase of 2% or more, while 18% were given a rise of between 0.1% and 1.99%.

Nearly half of private sector firms said they had paid a basic increase of at least 2% in 2014, which included 54% of manufacturing and production firms.

During the same period, more than a third of manufacturing and production firms (35%) froze pay. The trend was reflected in the services sector, where 47% agreed pay deals worth 2% or more, while 35% cent imposed a pay freeze.

Public sector employers were most likely to freeze pay with 54% opting not to increase wages in 2014. Small and medium sized employers showed similar wage restraint with 45% reporting pay freezes.

Gerwyn Davies, CIPD’s labour market analyst, said: “The figures show a clear gap between employees that have comfortably exceeded the current inflation rate in their pay packets and those who haven’t seen any increase at all. What’s interesting is that this gap exists within sectors, with a significant proportion of employers able to afford a 2% or above pay increase and a significant proportion of organisations in the same sector imposing a pay freeze.”

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