Manufacturing pay stable through main bargaining round

27 March 2012

Manufacturing pay settlements are continuing to remain at normal levels through the key bargaining period, with no sign of companies dealing with mounting pay pressures according to the latest data from the Engineering Employers' Federation (EEF) and JAM Recruitment. According to a survey of over 200 companies for the 3 months to the end of February, the average pay settlement for the period was 2.5%, a figure below the long term settlement average.

Lee Hopley

The data also shows that pay freezes have fallen to around 1 in 10 settlements whilst the vast majority of settlements continue to be below 3 per cent.

The figures from the current negotiating round back an EEF survey at the start of the year which showed that whilst 30% regarded significant upward pressure on pay as a risk to growth, only 5% of companies regarded it as their most significant risk. The issue ranked fourth behind shortage of raw materials, the financial crisis and access to external finance.

Commenting on the latest figures, Ms Lee Hopley (pictured), EEF chief economist, said: “Pay settlements have remained below long run average levels with a sense of economic realism prevailing in the key bargaining rounds at the start of the year. With inflation tracking back towards target the potential for escalating pay pressures in the year ahead shouldn’t pose a concern for policymakers.”

John Morris, chief executive of JAM Recruitment, comments: “The fact that modest pay rises are widespread in the sector indicates moderate growth in manufacturing and is certainly a positive sign when one considers the seemingly ubiquitous pay freezes in the wider economy. The slight increase in pay rises above three per cent may well be indicative of increased confidence in the industry and recognition of just how important it is to retain talented employees. Any spike in growth for the sector may mean that upwards pressure on wages increases even more in line with demand for manufacturing skills.”

The March 2012 Pay Bulletin contains information on 220 settlements covering 39,441 employees. These figures may be subject to revision to take into account settlements for this period that have not yet been received.