Manufacturing pay pressures reflect economic realism

23 April 2012

The main pay bargaining round for manufacturing has passed with economic realism prevailing and little or no pressures to worry policymakers, according to the latest data from EEF and JAM Recruitment. According to a survey of over 300 companies for the three months to the end of March, the average pay settlement for the period was 2.6%, a very small increase on the previous three month figure of 2.5% but still below the long term settlement average.

The data also shows that pay freezes have fallen to just under 1 in 10 settlements whilst deferred settlements are hovering around 5% of the total. Three quarters of settlements are at or below 3 per cent. Commenting on the latest figures, Ms Lee Hopley (pictured), EEF chief economist, said: “The main pay bargaining round for manufacturing has passed with little or no pay pressures evident. It is clear that the cocktail of competitive pressures and continued economic uncertainty is leading to a sense of realism on both sides.”

John Morris, Chief Executive of JAM Recruitment, said: “The fact that pay increases seem to have settled slightly below the historical average is good news for manufacturing businesses, which are not seeing margins depleted by excessive upwards pressure on wages. Despite this, there is a significant disparity between the salaries that manufacturing businesses are prepared to offer, and how much candidates think they’re worth. This tension could well nudge pay settlements back up to average levels and beyond in the near future.”