Caution outweighs wage demands, EEF says

Posted on 31 Mar 2011 by The Manufacturer

Cautiousness among employers and employees due to economic uncertainty is outweighing any demands for significant increases in pay settlements, according to figures from EEF.

Whilst the latest three-month period showed a slight rise in settlements, the manufacturers’ organisation stressed that this is continuing a trend back towards a more normal bargaining level following the recession when settlement levels fell to record lows.

EEF’s pay data for the three months to the end of February 2010 (the busiest wage negotiating period for manufacturing companies) shows that the average pay settlement rose slightly to 2.4%, up from 2.2% for the three months to the end of December.

The number of pay freezes has fallen slightly but still remains at just over one in seven settlements, whilst just over four in five settlements are at 3% or less.

Commenting on the figures, Ms Lee Hopley, EEF chief economist, said: “Fears of an escalation in manufacturing pay settlements continue to be unfounded so far. Despite the cost pressures being faced by both business and their employees, it is clear that continued uncertainty about economic prospects is weighing down on wage negotiations and maintaining a realistic approach.

“With little sign that this uncertainty will ease in the near future, Bank of England policy makers will undoubtedly be keeping a close eye on how pay deals evolve across the economy in the coming months.”