December 17, 2013 / 2:51 PM / in 5 years

Pay to perk up in 2014 as economy recovers-CBI

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 organisation of employers showed on Tuesday.

The Confederation of British Industry CBI.L said 42 percent 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.L) 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 percent 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 percent of firms said they planned a pay increase below RPI and only seven percent would raise pay by more than the index.

The CBI said companies expecting pay freezes next year fell to a four-year low of 8 percent, down from 16 percent in 2012. In 2009, more than half of firms planned pay freezes as they grappled with the recession.

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

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

Reporting by Freya Berry; editing by William Schomberg, Larry King

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