A survey conducted by the trade organisation EEF and JAM recruitment indicates that manufacturing pay settlements have levelled out to below pre-recession levels.
Contrary to claims that the high rate of inflation this year would cause an increase in pressure on pay rates, data from an EEF / JAM survey has shown that the average pay settlement from April to the end of June was 2.5%.
While 20% of pay settlements agreed have been a 3% increase, 12% of settlements were pay freezes. Nearly a quarter of the settlements in the study were an increase of 2% or less – a continuation of the trend seen between January and April this year.
“While there is undoubted pressure to give higher settlements, there is an equal dose of realism amongst companies and their employees in response to economic uncertainty and competitive pressures,” said Ms Lee Hopley, EEF chief economist. “As far as manufacturing is concerned at least, the Bank of England has little to fear from wage inflationary pressures,” she commented.
John Morris, chief executive of JAM Recruitment, said: “We’re seeing a more candidate-led market where employees know that there is growing demand for their valuable skills and that many employers will be willing – or compelled – to pay a premium for the best of the best.”
“The future challenge for employers is how to factor in the cost of employing the talent they need, and keeping it,” he added.
The July 2011 Pay Bulletin contains information on 293 settlements covering 44,339 employees. These figures may be subject to revision to take into account settlements for this period that have not yet been received.