Manufacturers fearful of labour costs as uncertainty takes hold

Posted on 27 Jul 2012

Wages within the manufacturing sector have remained steady as companies continue to live with uncertainty about the economic outlook and order prospects.

According to a survey of almost 250 companies carried out by JAM Recruitment and the manufacturers’ organisation EEF, the average pay settlement for the period (the three months to the end of June) was 2.5%.

Average settlement levels have now been unchanged since November 2011, with wages rising at a steady, but low level.

Pay freezes have remained constant, with 13% employers and employees having negotiated such arrangements.

Over four fifths of settlements are at or below three per cent.

Ms Lee Hopley, chief economist at EEF, said: “Stability is the word for wage inflation so far this year. There is still some recruitment taking place across the sector, so manufacturers will be looking to agree pay deals that attract and retain the skills they need.”

“At the same time, a lot of companies are looking at an uncertain year ahead and keeping costs under control will be just as important,” she added.

John Morris, chief executive at JAM Recruitment, commented that there is likely to be some variation within sectors, with the automotive sector particularly strong. The sector has been recruiting in big numbers with Jaguar Land Rover announcing over 1,000 new jobs this week.

“Feedback from companies suggests that there is still considerable pressure to manage costs but, as the skills shortage continues to bite, it will be interesting to see if the need for employers to engage and retain key staff has an upward impact on wages.”