Pay growth remains subdued across manufacturing, warns industry body EEF
Average pay settlements across manufacturing have been subdued since the start of the year, stuck under two per cent.
In the second major wage bargaining round of the year pay deals have averaged 1.7 per cent, according to EEF’s latest Pay Bulletin Survey.
But it's not just manufacturing that's feeling the pinch.
A separate report earlier this week found that in the three months to April overall pay increases are down on the 1.8 per cent reported in the three months to March, but consistent with rises seen since the start of the year.
A survey of more than 1,000 employers by the Chartered Institute of Personnel and Development (CIPD) discovered that pay awards will rise by just 1.7 per cent over the next year, marking the second time in a row the quarterly study has recorded a rise in pay less than government's two per cent inflation target.
The up coming EU referendum vote next month, as well as the introduction of the National Living Wage in April are both thought to have added to a slow down in pay growth.
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Lee Hopley, EEF chief economist, said:
There are plenty of reasons for companies to be taking a cautious stance on pay deals at the moment, particularly with a more fragile growth outlook and political uncertainty on the horizon.
Added to this is the introduction of the National Living Wage, which has potentially prompted a shift in companies’ approach to across the board pay increases. This will be a trend to watch as the NLW rate accelerates out to 2020.
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According to the EEF there has been an increase in the proportion of pay settlements resulting in a pay freeze, which spiked to a 67 month high of 24 per cent in April.
Average pay settlements have been heading lower over the past few years, following averages of 2.5 per cent in 2014 and two per cent in 2015.