Wage growth to remain flat as UK growth slows, says CIPD (EMABRGOED)

The growth in wages will continue to stall in 2015 as the UK economy grows at a slower rate, according staffing experts.

After labour productivity showed some welcome and much-needed improvement in the third quarter, Mark Beatson, chief economist for Chartered Institute for Personal Development (CIPD), predicted that the UK labour market will continue to expand at a strong rate in 2015 but would be unlikely to generate any real increase in wage growth until 2016.

He forecast that employment may grow by as much as half a million in 2015, slightly more than the Office for Budget Responsibility's predictions due to extra migrant and older workers seeking work, and more people entering employment under the government's Welfare to Work programme.

“By historic standards 2014 has been a year of reasonable growth, but there are still some very significant challenges that the government needs to address around productivity," he said.

"We said at the start of 2014 that productivity needed to be at the top of the agenda for government and the same is true for this year. As a country we are still producing less value today than before the recession, and the years preceding that. We need a massive step-change as without growth in productivity, we are unlikely to see real earnings grow for some time.”

With most economists confident that interest rates will rise but in small increments, Beatson suggested wage growth was likely to remain in the 1-2% range for most or all of 2015, although low inflation means average earnings may increase slightly in real terms.