Manufacturing pay settlements have risen to the highest level since October 1998, according to the latest information from EEF, the manufacturers’ organisation.
In the 3 months to the end of October 2004, the average level of pay settlements reported by manufacturing companies rose to 3.1%, up from 2.9% in the previous 3 month period to the end of September. However, this figure is based on a relatively small number of settlements (112) at a time of year when relatively few manufacturing pay settlements are concluded.
Furthermore, during this 3 month period, the percentage of companies reporting that they had frozen pay fell to 2.7%, the lowest figure recorded since December 1997. However, in contrast, the percentage of companies reporting that they had deferred their pay settlement rose to 6.3%, the highest figure since December 2002.
Commenting on these latest figures, David Yeandle, EEF Deputy Director of Employment Policy, said:
"Although based on a relatively small sample, this higher level of pay settlements reflects better trading conditions and a tight labour market. Whilst these figures do not demonstrate any real build up of wage inflationary pressures, they are a warning to the Government that future increases in the National Minimum Wage will need to be modest to avoid them creating an inflationary impact".
Settlement level - per cent
Number of settlements
Zero (pay freeze)
3
0.01-2.00
13 ( 11 settlements at 2 per cent exactly)
2.01-3.00
61 ( 31 at 3 per cent exactly)
3.01-4.00
23 ( 8 at 4 per cent exactly)
4.00 or more
12
The November 2004 Pay Bulletin analyses 112 settlements in the 3 months to the end of October 2004 and affecting 29,405 employees. Of these, the average settlement on both August and September 2004 was 3.1% and in October 2004 was 3.0% although these figures were based on a relatively small sample in all 3 months. These figures may be liable for revision to take into account settlements for this period that have not yet been received.