Real wages to fall as 24 chase each low-skilled job

A survey of 1,000 UK firms predicts basic pay will rise by just 1% next year, less than inflation

People queuing outside a Job Centre in east London
(Image credit: Daniel Leal-OlivasAFP/Getty Images)

Real wages will continue to fall over the next year, due to a glut of job applicants and despite record low unemployment.

That is the conclusion of the Chartered Institute of Personnel and Development and staffing group Adecco, which surveyed more than 1,000 British firms. They predict basic pay will rise by just one per cent over the next year, less than inflation, which is expected to reach three per cent.

The institure attributes low wage growth to a range of factors, including Brexit uncertainty, weak productivity and the rise in the National Living Wage.

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However it says another major factor is an oversupply of job applicants. There are a median of 24 job seekers applying for every low-skilled position, compared with 19 for medium-skilled and eight for high-skilled jobs.

The Daily Telegraph said the finding, which shows a "relatively sharp" increase in job applicants from EU countries, "contradicts claims that Brexit is restricting the supply of low-skilled labour".

However, despite unemployment being at a 40-year low, "employee pay expectations were weaker than last year, suggesting employers may not be coming under pressure from workers to increase pay", says Business Insider UK.

The CIPD's Gerwyn Davies said: "Predictions of pay growth increasing alongside strong employment growth is the dog that hasn't barked for some time now, and we are still yet to see tangible signs of this situation changing in the near-term."