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The CIPD reports that the private sector will see pay increase growth of 2.5% in basic pay expectations this year.

Driving this prediction is the labour market outlook where nearly three quarters (71%) of employers are finding vacancies harder to fill and a third (32%) report that it is becoming more difficult to retain staff according the CIPD.

The latest figures from the Office of National Statistics suggest that productivity in the UK has been growing slowly but growth is weakening. Measures such as performance reviews, training, promotions and particularly managing underperformance, were seen as having the strongest positive correlation with productivity.

We would argue that retaining staff also has a marked effect on productivity given the costs and time involved and training them.

However that re-emphasises the importance of training and managing under performance. Training managers to handle under performance is one of the greatest contributions Employer Solutions can make to your business.
Attempting to resolve recruitment and retention problems by increasing pay is a partial solution, at best.

Malcolm Martin FCIPD

Author Human Resource Practice