Manufacturing pay settlements have fallen sharply to their lowest level for more than 2 years as the impact of sharply rising external costs continues to bite, according to the latest information from EEF, the manufacturers' organisation.
The average level of settlement for the 3 months to the end of January 2006 was 2.5%, well below the revised figure for the previous 3 month period to the end of January of 2.8%. This figure is a significant indicator of pay settlement levels in manufacturing as January is traditionally the month in which the greatest number of pay settlements are reached.
As a further sign of the tight conditions currently facing manufacturers, nearly 1 in 10 companies reported that they had frozen pay in the 3 months to the end of January 2006, the highest level reported since December 2004. However, the number of companies reporting that they had deferred their pay settlement fell slightly to just under 5% of all settlements.
Commenting on these latest figures, David Yeandle, EEF Deputy Director of Employment Policy, said :
"These figures clearly demonstrate the extent to which external costs are now impacting on manufacturing companies. As a result, they are having to respond to this pressure by managing controllable costs such as pay levels as tightly as possible."
Settlement level - per cent
Number of settlements
Zero (pay freeze)
33
0.01-2.00
36 ( 27 settlements at 2 per cent exactly)
2.01-3.00
197 ( 90 at 3 per cent exactly)
3.01-4.00
47 ( 10 at 4 per cent exactly)
4.00 or more
6
The February 2006 Pay Bulletin analyses 319 companies covering 35,697 employees. Of these, the average settlement level was 2.7% in both November and December 2005 and 2.4% in January 2006 although the figures for November and December 2005 were based on relatively small samples of settlements. These figures may be subject to revision to take into account settlements for this period that have not yet been received.