Pay raises fall

Manufacturing pay settlements have fallen for the first time since December 2004 and are now at their lowest level for 12 months according to latest information from

, the manufacturers’ organisation.

Following an unprecedented 7 month period of stability at 2.8%, the average level of pay settlements for the 3 months to the end of the July 2005 fell slightly to 2.7%, the lowest level reported since July 2004.

In addition, during the 3 months to the end of July 2005, the number of manufacturing companies reporting that they had frozen pay rose to nearly 1 in 10 of all reported settlements and was the highest figure reported since December 2004.

In sharp contrast, the number of companies reporting that they had deferred their pay settlement fell to just over 2% of all reported settlements and was the lowest level reported since July 2004.

"These figures highlight the extent to which external cost pressures are bearing down on manufacturers and the efforts they are making to manage costs over which they can have some influence. Wage inflationary pressure remains absent from this sector of the economy," said David Yeandle, EEF Deputy Director of Employment Policy.

The August 2005 EEF Pay Bulletin looked at 185 settlements in the 3 months to the end of July 2005 affecting 18,821 employees. Of these, the average settlement level was 2.6% in May 2005, 2.8% in June 2005 and 2.6% in July 2005, although these were all based on relatively small samples of settlements.