Lower paid workers and those in areas with skills shortages are set to benefit from higher pay rates. According to a recent Bank of England survey, private sector employers in the UK plan to raise wages by 2.8 percent this year compared with just a 2.4 percent rise in 2015.
We are already expecting wage bills to rise for businesses with the new living wage being implemented in April this year. This will have a dramatic impact in the services sector where lower paid workers in areas such as retail and the restaurant and catering industries will be benefiting from pay rises worth almost £1000 per annum for full-time workers who are on the current minimum wage.
Another factor which is likely to lead to an increase in wages for employees and pay rates for contractors and the self-employed, is the significant skill shortage in some sectors.
We predict significant rises in rates for contractors in construction, IT and engineering as skills shortages intensify. Those with experience and who are willing to travel for the best contracts are likely to be able to negotiate higher rates.
Whilst the 2.8% rise is higher than last year there is still some way to go before wage increases reach the 4% they were at prior to the financial crisis in 2007.
