No sign of wage inflationary pressures building up in manufacturing

Posted on 22 Feb 2010 by The Manufacturer

The average level of pay settlements in manufacturing has risen slightly according to the latest figures from EEF, the manufacturers’ organisation. However, the overall levels remain at a historic low demonstrating the impact of continued tough trading conditions on companies.

EEF’s pay data for the 3 months to the end of January shows that the average pay settlement has risen slightly to 0.8% from the revised figure of 0.5% for the previous 3 month period.

This figure, which contains information about almost 250 settlements for January, is a significant indicator of future pay trends in industry as January is the main settlement month in the year.

During this latest 3 month period, the number of manufacturers freezing pay fell quite sharply to just over a half from just over two thirds of all reported settlements and was the lowest level reported since March 2009. The number of companies deferring their pay settlement also fell to just over 20% of all reported settlements, the lowest level reported since September 2009.

Commenting in these latest figures, David Yeandle, EEF Head of Employment Policy, said:

“Although the level of manufacturing pay settlements has risen slightly, it is still at an historically low level. Given these latest figures cover the key settlement month of January they show that there are no signs of wage inflationary pressures building up in the manufacturing sector.”

Settlement level (%) Number of settlements
Pay reduction 3
Zero (pay freeze) 149
0.01-2.00 85
2.01-3.00 37
3.01-4.00 3
4.01 or more 1

The February 2010 Pay Bulletin contains information on 278 settlements covering 44,833 employees. Of these, the average settlement was 0.4% in November 2009, 1.7% in December 2009 and 0.8% in January 2010 although the figures for both November and December 2007 are based on very small samples. These figures may be subject to revision to take into account settlements for this period that have not yet been received.