Manufacturing pay settlements are now at their highest level for more than 3 years according to the latest information from EEF, the manufacturers’ organisation, reflecting the improved conditions reported last week in its second quarter business trends survey.
The average level of pay settlements that was reported by engineering and manufacturing companies for the 3 months to the end of May 2004 was 2.8%, the same as the revised figure for the previous 3 months. This level of pay settlements is the highest level that has been reported by EEF since April 2001.
In addition, during the same period the number of pay freezes reported by engineering and manufacturing companies fell slightly to just over 7% of all reported settlements, the lowest reported figure since March 2001. In contrast, the number of companies reporting that they had deferred their pay settlement rose slightly to nearly 7%, the highest figure that had been reported since December 2002.
EEF Deputy Director of Employment Policy, David Yeandle, said:
"The tightening labour market, combined with the improving business confidence, is now being reflected in a slightly higher level of pay settlements. However settlements remain at reasonable levels and pose little or no inflationary threat."
Settlement level - per cent
Number of settlements
Zero (pay freeze)
22
0.01-2.00
29 ( 26 settlements at 2 per cent exactly)
2.01-3.00
189 ( 87 at 3 per cent exactly)
3.01-4.00
52 ( 17 at 4 per cent exactly)
4% plus
20
The June 2004 Pay Bulletin analyses 312 settlements in the 3 months to the end of May 2004 affecting 48,214 employees. Of these, the average settlement was 2.8% in both March and April 2004 and, based on a relatively small sample, 2.6% in May 2004. These figures may be liable for revision to take into account settlements for this period that have not yet been received.