Pay settlements of up to 14 per cent have been agreed with manufacturers, as business and investors gear up for fresh inflation figures, with prices rising at more than double the Bank of England’s target rate.
As reported by The Times, pay freezes have been increasingly uncommon, as the cost of living swells. Only two per cent of companies froze pay compared with a third of firms last year.
It comes as industry vacancies are at an all time high, and more than 90,000 manufacturing jobs are unfulfilled.
As a result, manufacturing wages have been forced to hike, with the industry boasting more than double the settlement high of 5.8 per cent of a year ago.
About 40 per cent of companies have come to an agreement, while 45 per cent are still in talks.
The remaining 15 per cent have not yet conducted their pay reviews or have delayed them, according to the survey by Make UK, the manufacturers’ association.
Most wage settlements were agreed at between two per cent and three per cent. With inflation at 5.1 per cent in the year to November, the highest since 2011, such deals equate to a pay cut in real terms, said The Times.
More than a third, or 38 per cent, of respondents settled on a pay rise of more than three per cent. About eight per cent of companies surveyed agreed pay rises of more than six per cent on last year.
The central bank raised interest rates from 0.1 per cent to 0.25 per cent in December, the first of what is expected to be a series of rate rises throughout the year.
Inflation is expected to peak at more than six per cent in April, when the cap on energy prices is lifted and increases to the minimum wage, living wage and national insurance come into force.