Manufacturing pay settlements have risen to 2.8% in the three months to the end of September, the highest level since April 2001 according to the latest information from EEF, the manufacturers’ organisation. This is up slightly from 2.7% in the three months to the end of August.
This reflects a combination of improved business conditions during 2004, a tightening labour market and the end of a long period of high levels of pay freezes and deferrals.
Reflecting this, during the 3 months to the end of September 2004, the number of pay freezes reported by engineering and manufacturing companies was just 7.5% of all settlements, less than half the level of 16.7% reported at the turn of the year. In addition, the number of companies reporting that they had deferred their pay settlement fell to 3.1%, half the figure of 2 years ago.
Commenting on these latest figures, David Yeandle, EEF Deputy Director of Employment Policy, said:
"Given the improved business conditions and the long period of both deferrals and pay freezes, it was inevitable that at some stage pay settlements would begin to creep up. However, employers and employees continue to act responsibly and, whilst settlements may edge up slightly higher still over the coming months, there is no reason to believe that they present any inflationary threat."
Settlement level - per cent
Number of settlements
Zero (pay freeze)
12
0.01-2.00
12 ( 11 settlements at 2 per cent exactly)
2.01-3.00
100 ( 51 at 3 per cent exactly)
3.01-4.00
28 ( 6 at 4 per cent exactly)
4.00 or more
9
The October 2004 Pay Bulletin analyses 161 settlements in the 3 months to the end of September 2004 covering 20,160 employees. Of these, the average settlement was 2.7% in July 2004 and 3.1% in both August 2004 and September 2004 although in these latter months this was based on a relatively small sample. These figures may be liable for revision to take into account settlements for this period that have not yet been received.