Business as usual for first manufacturing pay round of 2016

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  • The three month average pay settlement in January was 2%. This was in line with the average across 2015.
  • The average pay deal in January – when most of the settlements in our sample fall – was 2.2%, the same as the average increase in January 2015.
  • Over the three month period the proportion of pay freezes reported was 17%, while the share of high end pay settlements (at more than 3%) was 6% of all deals agreed

The first tranche of pay settlement data from manufacturers covering the major January pay round shows a slight increase in deals, with the three month average coming in at 2% according to a survey released today by EEF, the manufacturers’ organisation.

According to the survey, this represents a slight increase from December’s three month average of 1.9%. With most of the settlements falling in January, the monthly data is more significant on this occasion as it may provide a better benchmark for pay deals through the rest of the year. The monthly average settlement for January alone was slightly higher at 2.2%, the same as the average pay deal a year ago.

With a fairly stable profile of average settlement levels over the past year, the distribution of pay deals is also largely unchanged in the three months to January. The most common pay band was between 1.76 and 2% in the past three months – around a third of settlements fell within this range. Top end pay deals remain few and far between, with fewer than one in ten deals ending in a settlement above 3%.

Pay freezes became a more prominent feature of EEF’s Pay Bulletin over the course of last year and, in the three months to January, one in six settlements resulted in no change in pay. This was slightly down on the share of freezes at the end of 2015. Looking just at the data for January, however, and the proportion of freezes was lower still at 12%.

Commenting on the data, EEF Chief Economist Lee Hopley said:

“Pay settlements across manufacturing have been remarkably stable over the past year and the first indications from the sector’s major January pay round suggest business as usual in 2016. The persistence of low inflation and, expectations that the year ahead will bring more risks than opportunities, are contributing to the trend of modest pay increases across the sector.

“In addition, manufacturers have been expressing some concerns about the pipeline of employment-related cost increases, such as the national living wage and the apprenticeship levy. Companies remain cautious in balancing the need to retain skills and reward business improvements while avoiding locking themselves into higher payroll costs.”

The pay survey includes 158 settlements covering 30,857 employees.


Media Team 020 7654 1576

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