Manufacturing pay continues gradual upward curve

Posted on 20 Jun 2011 by The Manufacturer

Manufacturing wage settlements have continued to show a continued gradual increase according to the latest figures from EEF, the manufacturers’ organisation and JAM Recruitment.

Despite the small increase, there continues to be little sign of wage inflationary pressures. EEF’s pay data for the 3 months to the end of May 2011 (including that for April, the second busiest month for settlements) shows that the average pay settlement for the period increased to 2.6%, up from 2.5% for the three months to the end of April 2011.

EEF’s analysis shows the proportion of settlements agreed at more than 3% continued to drift upwards in the three months to May but, at the other end of the spectrum, one in seven pay deals are pay freezes. Continuing the trend seen through much of the year so far, settlements between 2% and 3% remained the most common.

Commenting on these latest figures, Ms Lee Hopley, EEF Chief Economist, said: “Despite the continued upward curve of pay settlements, we are only continuing a return to levels we would expect to see in relatively normal economic conditions. Whilst some companies are under pressure to give higher settlements, it is clear that the vast majority are under equal competitive pressure to maintain tight control of their internal costs.

According to John Morris, Chief Executive of JAM Recruitment, the average pay settlement is now three times what it was in March 2009 and is slowly but steadily climbing towards the three per cent mark, suggesting growing strength in the sector.

“It seems the future is looking rather brighter,” said Morris. “This picture is borne out by current recruitment trends. Almost a third of manufacturing companies recruited new employees in the first quarter and we’re expecting this figure to rise as the sector continues to grow.”

Settlement level – % Number of settlements
Pay reduction 0
Zero (pay freeze) 32
0.01-2.00 38 (1 at 1% exactly and 22 at 2% exactly)
2.01-3.00 103 (49 at 3% exactly)
3.01-4.00 39 (16 at 4% exactly)
4.01 or more 21

The June 2011 Pay Bulletin contains information on 233 settlements covering 39,881 employees.