Manufacturing pay hits two-and-a-half-year high

15-Jun-2017 - Last updated on 16-Jun-2017 at 12:50 GMT

Three-month average pay settlements in manufacturing rose to 2.3%

Manufacturing pay – including for food sector workers – recorded its highest level in two-and-a-half years, reports a survey by EEF, the manufacturers’ organisation.

Three-month average pay settlements in the manufacturing sector rose to its highest since December 2014, driven by inflation surges, EEF revealed in its latest pay survey.

The average pay settlement was reported at 2.3% in the three months to May 2017. The rising pay settlements was linked to a 2.9% rise in May’s inflation, EEF said. The 4% rise in the National Living Wage to £7.50 would have provided a modest boost, too, it added.

Six in 10 manufacturing workers gained at least a 2% pay rise over the three months, the survey revealed. One in four gained a pay rise above 3%.

‘Steady rise in pay settlements’

EEF latest pay survey – at a glance

Average settlement up to 2.3%
60% of workers gained at least 2% pay rise
25% of workers gained at least 3% pay rise

EEF senior economist Hela Mrabet said: “In what should be good news for many parts of the manufacturing workforce, the second quarter of this year sees a steady rise in pay settlement levels across the sector.

“Companies are responding to a number of factors that are having an upward pull on pay growth – rising in inflation, the increase in the National Living Wage and busy order books requiring more employees and higher productivity.”

Mrabet also attributed the pay rises to improving employer confidence.

“Manufacturers’ confidence is holding up, and their profit margins are in a better shape than they were a few months ago. This is prompting manufacturers to offer higher pay levels, which look to be running ahead of those in other sectors of the economy.”

Busy order books

Manufacturers were offering higher pay levels to recruit skilled workers and increase productivity, EEF said. Productivity had to increase to meet busy order books on the back of a global market upswing.

The pay survey included 97 settlements covering 18,701 workers.

Last month, EEF reported pay settlements had reached an 18-month high at 2.1%. At the time, the three-month average pay settlements was the highest since November 2015.

The news of rising pay settlements came after it was revealed demand for staff had risen to its highest level in 21 months. Demand was increasing as EU workers were “leaving in their droves”, according to Recruitment & Employment Confederation (REC).

Elsewhere, 48% of Morrisons’ shareholders voted against the directors’ remuneration report at the supermarket’s annual general meeting.

Meanwhile, for the latest jobs in food and drink, visit FoodManJobs.

How FoodManJobs boss sees pay scales

“Confidence in recruiting is definitely on the up – we have seen a 12% increase in jobs advertised within the last quarter compared with the previous period, creating a buoyancy in the market. I truly believe there has been a shift in the mind-set of forward thinking manufacturers who now see a need to invest long-term in their own workforce’s training and retention as well as talent pooling to combat the skills shortage – increase in salaries form just part of the solution.”