Low pressure on factory wages despite above-target inflation

 
Ben Southwood
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FACTORY firms suffered only very light upward pressure on wages in the three months ending with February, according to numbers put out this morning.

Almost 90 per cent of manufacturing pay settlements came in at less than three per cent, EEF, the manufacturers’ trade body, said, while 11 per cent of deals were pay freezes.

The average pay rise was 2.3 per cent, flat compared to January, and outstripped by consumer prices, which grew 2.8 per cent over the year to February, in their 39th successive month above the Bank of England’s two per cent target.

“The main bargaining period for manufacturing companies is passing with no evidence of pay pressures despite the increase in the cost of living,” said EEF chief economist Lee Hopley.

“These figures continue to suggest a cautious outlook for many companies who are bearing down on their internal costs, particularly those that continue to operate pay freezes,” she added.

John Morris, boss of recruitment firm Jam, who prepared the figures with EEF, guessed that 2013 might see stronger pay growth, driven by expansion in manufacturing itself boosted by the spate of business tax cuts in this year’s budget.

“Manufacturers may be wise to invest in developing their skills base to ensure they are well placed to capitalise on these opportunities,” Morris said.