Updated March 27th, 2024 at 08:48 IST

UK businesses scale back hiring, wage plans, Lloyds survey reveals

Despite signs of a slowdown, the Bank of England, which recently maintained interest rates, has noted that wage growth remains elevated.

Reported by: Business Desk
UK businesses | Image:Pexels
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British businesses in focus: British businesses have adjusted their staffing and wage plans this month, signalling a cautious approach as April's significant increase in the minimum wage looms, according to a survey released on Wednesday.

The latest Lloyds Bank Business Barometer indicated a moderation in hiring intentions, with the measure of staffing plans declining to 27 per cent, down from February's nearly two-year high of 36 per cent. 

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Similarly, the proportion of firms anticipating wage increases of 3 per cent or more over the next 12 months dropped slightly to 33 per cent.

Senior economist at Lloyds Bank Commercial Banking, Hann-Ju Ho, suggested that the forthcoming minimum wage hikes in April might be influencing business decisions, particularly among smaller firms.

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The impending rise in the minimum wage, expected to increase by nearly 10 per cent next month, has prompted adjustments in pay policies, with some retailers preemptively raising wages.

Despite signs of a slowdown, the Bank of England, which recently maintained interest rates, has noted that wage growth remains elevated.

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Overall business confidence, however, remained resilient, holding steady at a net 42 per cent, according to the Lloyds survey.

Additionally, the Resolution Foundation think tank highlighted the transformative impact of the minimum wage introduced in Britain 25 years ago. 

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The policy has resulted in significant pay increases for low earners, with their wages now £6,000 ($7,600) higher than they would have been otherwise.

Principal economist at the think tank, Nye Cominetti, hailed the minimum wage as the most successful economic policy of a generation, noting its role in reducing the share of workers on low pay from 22 per cent in 1999 to 9 per cent in 2023.

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Relative to wages in other advanced economies, Britain's minimum wage now ranks among the highest, comparable to those in France and South Korea.

(With Reuters Inputs)

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Published March 27th, 2024 at 08:48 IST