Fact Service May 2011

Issue 21

Pay settlements in manufacturing rise

Manufacturing wage settlements have crept up, but only back towards average historical levels according to the latest figures from the manufacturers’ organisation EEF and JAM Recruitment.

Having been through the two busiest months for wage negotiations in manufacturing — January and April — the EEF believes the latest data will help allay fears that there are significant upward pressures on wage inflation, reflecting continued uncertainty around prospects for the labour market and wider the economy.

Its pay data for the three months to the end of April shows that the average pay settlement for the period crept up to 2.5%, up from 2.4% for the three months to the end of March.

Despite the small increase, approximately 80% of settlements were below 3%, while just under 14% of companies were still operating pay freezes.

Ms Lee Hopley, the EEF’s chief economist, said: “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.”