According to a recent survey by the Chartered Institute of Personnel and Development (CIPD), UK employers are planning to increase pay by 5% this year, the highest rate since 2008. This reflects the growing demand for skilled workers in a tight labour market, as well as the rising inflation and cost of living.

The survey also found that employers are increasingly making counteroffers to retain existing staff, who may be tempted to look for better opportunities elsewhere. The CIPD warned that this could create a "competitive spiral" for talent and undermine employee morale and loyalty.

The CIPD urged employers to adopt a more strategic approach to reward and recognition, rather than relying on short-term financial incentives. It suggested that employers should focus on creating a positive work environment, offering flexible working arrangements, providing career development opportunities, and enhancing employee wellbeing and engagement.

The CIPD's senior policy adviser, Charles Cotton, said: "While pay is important, it's not the only factor that influences how people feel about their work. Employers need to think holistically about how they attract, motivate and retain their staff, and ensure that their reward practices are aligned with their business objectives and values."

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