In a latest survey from employers' group CBI, data revealed that British employers are cautious about offering meaningful pay rises even if they expect to keep hiring permanent staff in 2016, The Guardian reports Monday.
According to the lobby group, some companies are also looking into price hikes or recruitment freezes in order to offset higher labour costs. The compromise is due to the introduction of the "national living wage" in April, and a new apprenticeship levy.
CBI director for employment and skills Neil Carberry said that these changes and compromise the economy need to subscribe to is due to the fact that we are living in an era of significant labour market interventions.
"The UK's labour market is in fine fettle, though it's clear that maintaining flexibility is of the utmost importance to employers." Carberry said. He also added that companies are concerned about the apprenticeship levy and view it as a payroll tax. So the CBI therefore is determined to work with the government to make sure that businesses will be able to see that their money is spent well.
The lobby group considers the said changes the most significant interventions in the labour market since "Tony Blair's government introduced the minimum wage and other employment laws in the late 1990s".
The survey conducted by the group which involved 342 employers, covering almost 1 million employees has found that over 47% anticipated the new levy would be both "costly and bureaucratic".
The survey however, was conducted between periods August and October- before Osborne confirmed 0.5% of an employer's payroll, which applies to companies with a yearly wage bill of more than £3m. The the levy is expected to help the government hit a target of 3m apprenticeship by 2020, while about 52% said they plan to raise pay at least in line with the retail prices index (RPI) by 1.1% in the coming year.
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