BOE Agents: Recruitment Problems Intensify; Pay Growth Modest

By David Robinson

     LONDON (MNI) - The Bank of England agents fourth quarter report found

recruitment difficulties but that employers, faced with higher input costs, were

expecting to agree only moderately higher pay settlement in 2018.

     The agents report said that a significant number of employers "expected pay

awards to edge up a little towards 2.5%-3.5% over the next year, from 2%-3% in

2017" with some employers offering improved non-pay benefits to try and get

around recruitment difficulties.

     The Q4 survey found that recruitment difficulties had become more

widespread across sectors and skill levels with some employers who relied on

seasonal workers, in sectors such as agriculture, finding that these workers

were less inclined to travel to the UK due to Brexit uncertainty and sterling

weakness.

     "There had been a small number of reports of companies increasing EU

workers' wages partly to offset the impact of weaker sterling on repatriated

pay, but contacts were more likely to have enhanced non-pay benefits, such as

subsidised accommodation," the report said.

     The broad picture of a modest pick-up in wage growth supports the Monetary

Policy Committee's assumption in the November Inflation Report that earnings

growth will rise somewhat. The agents also noted that employers were facing

higher input costs due to a combination of rising global market prices and

sterling weakness.

     The BOE's quarterly Decision Maker Panel survey, a comprehensive review of

business views on the impact of the withdrawal from the European Union, found

the chief financial officers (CFOs) expected some weakening in sales growth over

the next year, with annual sales growth falling to 3.7% in Q3 2018 compared to

5.7% in 2017.

     Employment growth was expected to grow more slowly, with wages expected to

rise by 2.5%, at the bottom end of the agents scale.

     Brexit was largely not seen as a driver of wage growth, with just over half

of panel members saying that Brexit would have no material impact on wage

setting and the remainder divided over whether it would push up or down on pay.

     Brexit overall was expected to be markedly more likely to hit sales than

boost them, with CFOs putting an average 45% probability on a negative impact on

sales and 18% forecasting a positive effect.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

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