Manufacturing pay settlements head higher in 2018 | EEF

Manufacturing pay settlements head higher in 2018

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  • The three month average pay settlement in February was 2.4%, up from a revised average of 2.3% in the three months to January.
  • The average pay deal in February was a shade higher at 2.5%.
  • The proportion of pay settlements that resulted in a freeze has dropped significantly over the past year, coming in at 4% in the three months to February.

Average pay deals continued to creep higher at the start of 2018 with the average wage settlement agreed at 2.4% across manufacturing in the three months to February, according to the last Pay Bulletin from EEF, the manufacturers’ organisation.

Throughout 2017 and in the first months of 2018 there has been a gradual acceleration in pay growth across the sector as inflationary pressures kicked in and business conditions improved.

At the start of 2018, elevated CPI inflation and a positive trading outlook for manufacturers are still very much at play in determining pay deals, with average settlements nudging higher again to 2.4% in the three months to February, up from a revised 2.3% average in the three months to January.

The distribution of settlements has moved little in recent months with 84% of deals agreed between the relatively narrow band of between 1.75% to 3%.  But of these, two-thirds were evenly split between pay deals at exactly 2% and exactly 3%.

The proportion of pay freezes and deferred settlements continue their decline. In the three months between December and February, pay freezes accounted for 4.0% of total settlements and deferrals for 3.0% down from 4.0% in the previous bulletin.

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

“The first indications from the major pay round at the start of the year show an increase in the average settlement level across manufacturing at the start of 2018. This reflects a combination of brighter business conditions for the sector together with firms responding to higher inflation and the need to offer competitive market rates.

“The direction of travel of pay increases so far this year is in line with the Bank of England’s expectations, but with top end deals still very much in the minority average pay settlements look some way from breaching the 3% mark, but should be outpacing inflation in the second half of this year.”

The pay survey is subject to revision as more settlement information is reported.  This month the report includes 99 settlements covering 17,989 employees.


About EEF

EEF, the manufacturers’ organisation, is the representative voice of UK manufacturing, with offices in London, Brussels, every English region and Wales.

Collectively we represent 20,000 companies of all sizes, from start-ups to multinationals, across engineering, manufacturing, technology and the wider industrial sector. We directly represent over 5,000 businesses who are members of EEF. Everything we do – from providing essential business support and training to championing manufacturing industry in the UK and the EU – is designed to help British manufacturers compete, innovate and grow.

From HR and employment law, health and safety to environmental and productivity improvement, our advice, expertise and influence enables businesses to remain safe, compliant and future-focused.


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