According to the market predictions from CIPDs annual labour report it seems that we will see pay, productivity and migration at the top of the agenda for 2018 ahead of our exit from the European Union. 2017 has been a year with pressure ever increasing for the cost of living and CIPD has predicted we will see the following for 2018;
- There is minimal evidence that the pay squeeze will come to an end anytime soon so it is likely pockets will continue to be squeezed with only a falling inflation likely to leaf to any meaningful wage increases for 2018
- It is expected that there will be a tightening of the UK workforce with increased constraints on labour supply; it is expected by the CIPD that 2018 could be the year that the UK finally runs out of people to fill jobs.
- CIPD predicts there will be no improvement in productivity, in fact there will be a continuation of stagnation for UK productivity and this is likely to remain well below pre-cash levels.
Acting Chief Economist at the CIPD, Ian Brinkley states that 2017 has seen record-high employment but a tight squeeze on household budgets and he feels this will continue to be the same for 2018 as Brexit negotiations are reaching their next crucial phase. While workers will be hoping for pay rises faster than inflation it is unlikely this will happen until much later in 2018.
When talking about the UK labour market Ian Brinkley predicts that the year will end with more people in work than ever before however there are signs that peak employment has been hit. There is little sign of excess demand for jobs so it is expected that unemployment levels with remain roughly the same for the period of 2018.
Sharing his predictions for pay in 2018, Ian Brinkley of CIPD stated that there is little evidence the wage squeeze will end soon though some workers will see a wage improvement with the improvement of the national minimum wage. It seems that most employers can’t afford or don’t feel the need to make an above-inflation pay rise; further to this, those employees hoping to see more money in their pockets should hope inflation returns to the 2% target which is predicted by experts to happen towards the end of 2018.
On migration Ian Brinkley predicts that we have been able to supplement our labour supply through net migration until now and this was why the UK workforce has kept growing. Due to recent falls in net migration, post referendum it seems this may not be a long-term solution and any adjustments to this are likely to be slow and steady, as opposed to a situation where supply disappears over night. That said, it is worth remembering that the number of EU-migrants coming to the UK has remained the same with the pre-Brexit average so the effect of Brexit may not be as severe as some predicted.
In regards to productivity, Ian Brinkley predicts that there is nothing to suggest a long-term productivity recover underway, even though figures from the last quarter are up from some expectations. It is expected that productivity may improve slightly through 2018 but this time next year we will still face productivity outcomes that are well below pre-crash levels.