Wage Growth Holds Steady Amidst Hiring Concerns
British employers anticipate raising pay by a median of **3%** in the next year, maintaining the rate seen for the past six consecutive quarters[1]. This comes as overall hiring intentions are among the weakest recorded since the pandemic, with especially low prospects in the public sector[1].
- A recent Bank of England survey showed expectations for wage growth reached **3.7%** in the three months to October, the highest in five months[1].
- Official government labour market data is expected to indicate a slight slowdown in wage growth, with economists forecasting an annual **4.6%** increase in regular pay for the three months to September, slightly below the previous month's 4.7%[2].
AI Adoption Predicted to Reduce Workforce Sizes
A notable finding from the Chartered Institute of Personnel and Development (CIPD) survey is that **one in six employers** expect the implementation of **AI tools** to enable them to lower their headcount over the next year[1][3]. Among these, a quarter predict staff reductions will exceed 10%, targeting roles such as:
- Junior managerial
- Clerical
- Professional
- Administrative positions[1][3]
Tools like
ChatGPT are increasingly cited as contributing to this trend.
Government Tax Policies Impact Hiring and Investment
Concerns are mounting over government tax strategies, particularly after last year's substantial rise in employers' social security contributions. The CIPD urged Finance Minister Rachel Reeves to avoid policies that could further suppress hiring in her upcoming budget[1].
James Cockett, CIPD's senior labour market economist, emphasized the need for a shift in focus toward long-term workforce planning and skills investment, advocating for initiatives that help employees use AI productively or transition to new roles as AI adoption grows in the workplace[1].
Broader Economic Context
While the Bank of England recently held interest rates steady at 4%, signals suggest a possible rate cut at its next meeting in December. The central bank continues to monitor pay growth closely due to its potential impact on inflation[1].
British wage growth generally outpaces pay settlements because pay settlement figures exclude gains from workers switching to higher-paid jobs[1].
Key Takeaways
- **Median pay rise expected:** 3%
- **AI-driven job reductions:** 1 in 6 employers foresee workforce shrinkage, with some reductions potentially exceeding 10%
- **Most affected roles:** Clerical, junior managerial, administrative, and professional positions
- **Hiring intentions:** Lowest since the pandemic, especially in public sector
- **Emphasis needed:** Investment in skills and AI workforce planning to safeguard jobs
For more information on AI tools such as
ChatGPT, see the latest developments in workplace automation.
