Pay deals reflect growing economic optimism - EEF

Its survey of almost 250 wage settlements covering 40,000 workers shows that the three-month average pay settlement by manufacturers has remained at 2.6%. It compares with average pay settlements last year of 2.4% with those agreed in the summer months at 2.2%. However, it also suggests that manufacturers have reached affordable agreements with staff, allaying fears about wage inflation. The EEF said: "The proportion of pay freezes has stabilised at 5%, the lowest level since August 2008, while the proportion of smaller settlements has continued to fall with just over a quarter (26%) coming in at less than 2%. Pay deferrals have also remained stable at 4%." Lee Hopley, chief economist at EEF, added: "We're by no means out of the woods yet, but there's plenty to suggest that we're on the right path. Pay settlements seem to be stabilising at a level that is both affordable and higher than last year. This is another good indication that the green shoots of recovery are firmly taking root and the pressure on household budgets, at least for manufacturing employees, is starting to unwind. "Manufacturing continues to be a driving force and this also reflects in the growth of pay where the sector is outpacing the rest of the economy. Put simply, workers in the sector are reaping the rewards of recovery earlier than others. Hopefully this level of confidence will continue as manufacturers carry on picking up pace."