Bank of England report highlights zero wage growth across private sector firms
Pay settlements in the construction industry are expected to stagnate this year, according to a new report from the Bank of England.
With inflation currently running at 3% – one percentage point above its target of 2% – the Bank’s regular poll of nearly 400 private sector businesses across manufacturing, construction, business and consumer services found that firms overall expected an average pay settlement rate of 3.1% this year, compared with 2.6% in 2017.
Despite inflationary pressures pushing up wages elsewhere in the economy, construction pay rises are forecast to remain at 3.2%, the same level as last year.
Pay deals in the consumer services sector are expected to rise from 3.2% to 3.9%, business services from 2.1% to 2.5% and manufacturing from 2.4% to 2.7%.
Factors driving up the overall cost of labour include the availability of suitably skilled workers, employer pension contributions and increases to the National Living Wage, the Bank said.
Sector observers have cited rising wage bills as a reason for an upturn in tender prices throughout 2018, as well as a hike in the cost of materials.
UK construction was the only sector to shrink in the third quarter of last year.