UK employers expect 3% pay rises but one in six plan workforce cuts due to AI, with hiring intentions at post-pandemic lows, CIPD survey reveals
LONDON: British employers plan to raise wages by 3% over the next 12 months while anticipating artificial intelligence will reduce their workforce, according to a new survey.
The Chartered Institute of Personnel and Development reported hiring intentions remain near their weakest levels since the pandemic, particularly within the public sector.
One in six employers expect AI tools will enable them to reduce headcount within the next year.
Among those planning cuts, a quarter anticipate staffing reductions exceeding 10%, with junior managerial, clerical, professional and administrative roles most vulnerable.
The CIPD urged finance minister Rachel Reeves to avoid further measures that could dampen hiring in her November 26 budget.
Senior labour market economist James Cockett said job seekers already feel the impact of slower hiring since Reeves’ first budget.
“We need to see a stronger focus by the government and employers on longer-term workforce planning and investment in skills to help people use AI effectively in their roles or transition into different jobs or occupations as AI use grows,” Cockett said.
The survey of over 2,000 businesses showed median expected basic pay increases have remained at 3% for six consecutive quarters.
A separate Bank of England employer survey released Thursday showed wage growth expectations rose to 3.7% in the three months to October, the highest reading in five months.
Official labour market figures due Tuesday are expected to show a slight slowdown in wage growth.
Economists forecast regular pay in the three months to September increased by 4.6% annually, slightly below the previous month’s 4.7% rise.
British wage growth typically outpaces pay settlements since the latter excludes gains from job changes.
Although the Bank of England held interest rates at 4% last week and signalled potential December cuts, it continues monitoring pay growth’s potential inflationary impact.
The CIPD survey was conducted between September 19 and October 14. – Reuters
