Embargoed to 0001 Thursday August 02

Firms are committed to giving workers a pay rise in the coming year, with many keeping increases in line with the rate of inflation, a new report predicts.

A survey of more than 1,000 businesses found that half are set to award rises above 2%, around one in eight in line with inflation, and almost a fifth by between 1% and 2%.

Only 2% of the firms polled by the British Chambers of Commerce (BCC) and recruiters Indeed said they expected to cut salaries.

CPI inflation is currently 2.4%.

Almost two out of five of those questioned said they would increase prices for products and services in response to rises in the national living wage.

Jane Gratton, of the BCC, said: "This is good news for employees who have felt the squeeze in their pay packets in recent months.

"People and skills are the most important asset for businesses, and so employers will want to pay a great wage that motivates and retains their team. But the cost of wage increases has to be offset in some way, for example by greater productivity, lower costs or higher prices.

"Our survey work has shown that growing and pervasive skills shortages are making it harder than ever for firms to fill job vacancies - so it is little surprise that they are pulling out all the stops to keep hold of the ones they have.

"To avoid future job losses, the Government must avoid any additional costs on business and help firms to boost productivity, for example by making it easier for firms to use the apprenticeship levy to upskill their staff."

Tara Sinclair, of Indeed, said: "These figures suggest brighter times are ahead for workers who after seeing their wage growth barely exceed inflation could receive a meaningful pay rise."