Employers in the UK intend to raise salaries by 5%.

According to a study that adds to indicators of inflationary heat in the labour market, British companies anticipate raising pay by 5% over the upcoming year and are increasingly making counteroffers to retain personnel who are enticed by greater earnings from competitor firms.

Human resources executives planned to raise basic pay rates by a median of 5%, according to the Chartered Institute of Personnel and Development (CIPD). This expectation was constant from the previous two quarters and was one of the highest readings since the survey's inception in 2012.

The CIPD has shown that pay expectations in the public sector have increased from 3.3% to 4%, the highest level ever.

Before Prime Minister Rishi Sunak announced a wage increase of more than 6% to teachers, physicians, and other public-sector workers, the poll of 2,000 businesses was conducted between June 9 and July 5.

The 5% private sector wage growth projections that the CIPD discovered were consistent with the results of a recent company survey conducted by the Bank of England.

On August 3, the BoE noted that wage growth had not slowed, raising the possibility of ongoing high inflation and higher interest rates.

In the three months leading up to May, annual earnings growth, which is normally a little higher than pay settlements, was 7.3%. Data on Tuesday is anticipated to reveal a further rise.

Businesses are also more likely to match or outpay rivals' pay offers to employees, according to the CIPD.

In the previous year, two-fifths of businesses reported making a counteroffer to retain employees. Just over 50% of those companies claimed to be using counteroffers more frequently than before, while just 9% claimed otherwise.

When a counteroffer was made, it equalled competitive pay in 38% of the cases and went above it in 40% of the cases. However, nearly a third of companies thought counteroffers were useless for maintaining employees.

(Sources: investing.com, reuters.com, cipd.org)