Engineering news
Average pay settlements in the manufacturing sector have gone up, while pay freezes have gone down, according to the latest Pay Bulletin data from EEF, the manufacturers’ organisation.
The monthly average pay settlement for January increased slightly at 2.0%, up from the average pay deal of 1.8% the same month a year ago.
Between November and January, two-thirds of pay deals were agreed at or below 2%, consistent with the distribution of settlements over the past year.
Pay freezes became a more prominent feature for manufacturers in 2016, peaking at 26% of settlements in August as firms became more cautious in the face of uncertainty. However, in January this year, the share of pay freezes fell back to 9% of settlements agreed since November and to 7% of settlements for January alone.
There was also a slight rise in the proportion of pay deals agreed above 2%. These accounted for one in three pay settlements in the three months to January, most of which fell in the 2-3% range. By contrast, pay deals above 3% remain few and far between, accounting for only 3% of settlements.
Lee Hopley, chief economist at EEF, said: “The first indications from the January major pay round show an increase in average settlements across manufacturing at the start of 2017. The rise is moderate, however, compared to the faster acceleration in consumer price inflation. While more companies are offering pay increases in January, the largest proportion of pay deals remain at or below 2%, only a shade higher than the 1.8% increase in consumer prices.
“As uncertainty continues around business conditions, manufacturers remain cautious when it comes to pay rises. In addition, the recovery in oil and commodities prices and the dive in sterling have caused a surge in input costs, squeezing manufacturers’ profit margins and acting as a drag on the affordability of higher pay levels. But with CPI set to breach the Bank of England’s 2% target in the coming months, there could be some pressure coming on future pay deals,” Hopley added.