Manufacturing pay rises to 18-month high

Average manufacturing pay settlements has risen above 2% for the first time since November 2015

Three-month average pay settlements in the manufacturing sector have risen above 2% for the first time since November 2015, according to a survey by EEF, the manufacturers’ organisation, following a surge in inflation.

The average pay settlement was reported at 2.1% in the three months to April 2017. Less than 10% of settlements were deferred or decreased in April alone – the second most important bargaining month for manufacturers, EEF said.

EEF senior economist Hela Mrabet said: “The second major bargaining round of the year confirms the upward trend in pay settlement levels across manufacturing in response to the continued rise in inflation. As business conditions continue to surprise on the upside, the sector enjoys tailwinds from a stronger global economy and, with the pressure from past surges in input costs somewhat easing, manufacturers are also offering higher pay increases than they did earlier this year.

‘Few and far between’

“Caution is not completely shrugged off, however, as most settlements are still running below consumer price inflation, while deals above 3% remain few and far between.”

EEF’s survey – which included 77 settlements from 17,900 workers – found the number of pay freezes over the three months fell to 9% of settlements, while deferrals accounted for about 2% of settlements. It came after 26% of settlements in August 2016 ended in pay freezes.

Average weekly earnings

The settlement figures from EEF were also reflected in official statistics from the Office for National Statistics, revealed today. The three-month average weekly earnings in manufacturing increased to 2.5% in March, from 1.7% in December.

Mrabet said: “The strong momentum in wages within manufacturing also contrasts with the pace seen in the economy as a whole, where growth in earnings fell to 2.1% in the first quarter from 2.3% in the final quarter of 2016.

Meanwhile, the latest pay settlements rise came after the average pay settlement in January was up to 2%.

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