UK employers are keeping their options open with regards to pay rises because of hiring problems and increases in inflation, new research suggests.
Results from the survey by the Chartered Institute of Personnel and Development (CIPD) show at least one in five employers are avoiding making a decision about pay rises until they have a clearer idea of the direction inflation is heading.
Nevertheless the majority of employers expect to award staff pay rises of less than 3.5 per cent.
The wider RPI measure of inflation used in wage deals - which includes mortgage interest payments - reached 4.4 per cent in December last year, which is the highest it has been since 1991.
Dr John Philpott, chief economist at the CIPD, said labour market conditions looked "conducive to moderate pay settlements this winter, with enough willing workers, especially migrants, to help employers withstand claims for inflation matching pay rises".
The report also suggests that 46 per cent of employers foresee difficulty with finding suitable recruits. However, 80 per cent said they expected staff numbers to increase over the next few months.
In October last year the government raised the adult minimum wage rate from £5.05 to £5.35 an hour. When plans for the increase were announced in March 2006, Alan Johnson suggested that the rise would benefit 1.3million people.
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