By Suban Abdulla
LONDON (Reuters) - British employers expect to raise wages for their staff by the most in at least 11 years but the 5% pay deals for workers would still fall well below expected inflation, a survey published on Monday showed.
With the Bank of England fearing the surge in inflation could be harder to tame if pay deals keep rising, the Chartered Institute of Personnel Development (CIPD) said 55% of recruiters planned to lift base or variable pay this year as they struggle to hire and retain staff in Britain's tight labour market.
Expected median annual pay awards in 2023 rose to 5% - the highest since CIPD records began in 2012 - from 4% in the previous three months.
More than half of respondents reported having problems filling vacancies, and nearly one in three expected similar issues in the next six months.
"Skills and labour remain scarce in the face of a labour market which continues to be surprisingly buoyant given the economic backdrop of rising inflation and the associated cost-of-living crisis," Jon Boys, senior labour market economist at the CIPD, said.
The survey also showed the gap between public and private employers' wage expectations widened. Planned pay settlements in the public sector fell to 2% from 3% in the quarter before, compared to 5% in the private sector, the CIPD said.
The results highlighted the squeeze on living standards as key workers including nurses, teachers and public transport staff stage a series of strikes over pay and work conditions.
BoE Governor Andrew Bailey last week expressed concerns about wage-setting, despite signs that the surge in inflation has turned a corner.
Annual inflation fell to 10.5% in December after hitting a 41-year high of 11.1% in October. Bailey signalled inflationary pressures were still a worry despite the BoE raising interest rates to the highest since 2008 this month.
The quarterly survey showed recruiters were more willing to hire people returning to the workforce, including older workers and those with health conditions.
The CIPD surveyed 2,012 employers between Jan. 3 and Jan. 25.