Manufacturing pay creeps up though little fears of significant wage pressures

23 May 2011

Manufacturing wage settlements have crept up, but only back towards average historical levels according to the latest figures from the entgineering Employers' Federation (EEF) and JAM Recruitment. Having been through the two busiest months for wage negotiations in manufacturing (January and April), EEF believes the latest data will help allay fears that there are significant upward pressures on wage inflation.

Manufacturing wage settlements have crept up, but only back towards average historical levels according to the latest figures from the entgineering Employers' Federation (EEF) and JAM Recruitment. Having been through the two busiest months for wage negotiations in manufacturing (January and April), EEF believes the latest data will help allay fears that there are significant upward pressures on wage inflation.

EEF’s pay data for the 3 months to the end of April 2011 shows that the average pay settlement for the period crept 2.5%, up from 2.4% for the three months to the end of March 2011. However, despite the small increase approximately 80% of settlements were below 3%, whilst just under 14% of companies were still operating pay freezes. Commenting on these latest figures, EEF chief economist Lee Hopley says:

“We have now been through the two single busiest months for wage negotiations and there remains little evidence of significant upward pressure on pay. Despite the small increase we are only returning to the level of settlements we would expect to see by historical standards. Economic uncertainty and the need for companies to control their costs in the face of global pressures continue to be the main driver of agreements."

John Morris, Chief Executive of JAM Recruitment, says: “Assertions that this month’s average pay settlement, the highest since January 2008, is an indication of sustained wage inflation in the manufacturing sector may well be premature, but it is heartening that after two years of fluctuation, the majority of pay increases appear to have settled around modest levels. The challenge now is for industry to keep investing in its future, so it is ready to meet the challenges of any significant and sustained upturn.”

The May 2011 Pay Bulletin contains information on 180 settlements covering 35,412 employees. These figures may be subject to revision to take into account settlements for this period that have not yet been received.