U.K. pay to perk up in 2014 as economy recovers: Survey

12 per cent planning to cut workforce

LONDON (Reuters) — More British firms expect wages to rise in line with inflation next year than at any time since the 2008-2009 recession, a survey conducted by a leading organization of employers showed on Tuesday.

The Confederation of British Industry (CBI) said 42 per cent of firms believed salaries would grow in line with the Retail Price Index (RPI), the highest proportion since 2009.

Bank of England Governor Mark Carney said in November that wage increases in line with the Consumer Price Index (CPI) were likely to come between mid-2014 and the end of 2016.

The RPI usually gives a higher inflation figure than CPI — it was at 2.6 per cent in the 12 months to October — and is generally used as a basis for private-sector pay deals, although wages have lagged behind in recent years.

"Pay, as we see today, is returning with growth," said Neil Carberry, director for employment at the CBI.

Employers remain cautious about pay increases: 39 per cent of firms said they planned a pay increase below RPI and only seven per cent would raise pay by more than the index.

The CBI said companies expecting pay freezes next year fell to a four-year low of eight per cent, down from 16 per cent in 2012. In 2009, more than half of firms planned pay freezes as they grappled with the recession.

The report showed 51 per cent of companies expected to create jobs over the coming year and only 12 per cent thought they would cut the size of their workforce.

Jobs for permanent staff also grew more quickly, with a net increase of 18 per cent against a rise of 14 per cent in temporary positions.

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