Nearly half (44%) of businesses plan to raise pay in line with inflation, with a quarter (24%) intending to increase the raise above-inflation, according to a new report.
The survey, which quizzed 422 Confederation of British Industry (CBI) members, also shows that 87% of businesses are intending to recruit permanent roles this year, with nearly half of organisations (46%) expecting higher levels of recruitment.
Despite the potential for a nationwide pay increase, the employers organisation warned access to labour is an issues for UK businesses with around three quarters (76%) struggling to recruit, the highest figure since 2016.
The CBI have since called on the government to relax post-Brexit visa restrictions on European Union workers with in-demand skills by reviewing the shortage occupation list.
Matthew Percival, CBI director of skills and inclusion, said: “Pay intentions are rising across the board as firms reopen and the economy recovers.
“This could be challenging though, for those businesses that remained shut during lockdowns and need to recoup losses and pay off Covid debts.
“Pay rises need to be underpinned by productivity or risk being passed on to customers through higher prices.
“The Government using the upcoming Budget to boost business investment will be key to achieving this and preventing rising employment costs damaging labour market competitiveness.”