Manufacturing staff cash in as pay runs ahead of wider economy

Darrell Matthews, EEF North West Region Director

Manufacturing employees are continuing to see the benefit of economic recovery in their earnings, according to the latest pay data from EEF, the manufacturers’ organisation.

The data shows that the average pay settlement in the six months from February to July was a healthy 2.6%. Importantly, this includes April, one of the year’s major pay rounds, which is seen as a good indicator for pay this year.

At 2.6% the figure is an increase on last year where pay settlements averaged out at 2.4%. Furthermore, pay deferments and freezes have continued to fall, with the 3 month average for freezes in July this year running at just 6.4% compared to 14.6% in July 2013.

The news follows last week’s data showing that earnings are struggling to recover across the wider economy. In contrast, EEF’s findings suggest that manufacturers are rewarding their employees after a very difficult economic period, which saw a substantial number of deferments and freezes.

Employers are also countering the effects of skills shortages by paying above-inflation awards to retain and attract key staff.

Darrell Matthews, North West Region Director at EEF, says: “Manufacturing pay continues to run ahead of the wider economy with signs that the pressure on household budgets, at least for those in industry, is starting to unwind.

“After many challenging years, manufacturers now seem to be in a position to pay their employees back for their support in keeping jobs and businesses going. But while business across the sector is on the up, affordability will remain a key consideration in future pay deals as manufacturers grow in confidence that the recovery is secure.”

These latest pay figures come at a time when the industrial relations landscape is changing post-recession and ahead of the two main negotiating periods before the General Election next year.

To help employers get to grips with this changing scenario and manage effective relationships with their employees, EEF’s expert team of employment relations advisers is running a conference entitled ‘Managing Employee Relations’ at five locations across the UK.