Today we have published our first pay data for 2013. In many ways the trends are similar to those we've seen in the last two years: the majority of pay settlements in manufacturing have ended in modest pay deals between 2% and 3%.
January's figures have shown a slight dip in the three-month average settlement, to 2.3%. This follows on from two years in which settlements remained within a band of 2.4 – 2.6%.
This suggests that, as yet, wage pressure has remained contained.
Source: EEF/JAM Pay Bulletin
But will pay pressure remain in check?
Although consumer price inflation was coming down in mid-2012, recent news saw it sneak back up to 2.7%, where it has remained for last four months. The recent Inflation Report from the Bank of England suggests it is likely that inflation could rise further.
We have heard anecdotal evidence from manufacturers that, while they have been able to settle at – or close to – rates of inflation, recent remarks from the Bank of England have led increased pressure for higher pay rises.
However, our recent Executive Survey showed that most manufacturers did not expect pay pressures to present a significant risk to growth this year (≈15% said this was a risk, compared with closer to 30% a year ago).