Pay settlements resist upward pressure

Manufacturing pay settlements appear to have levelled out below pre-recession levels, easing fears that higher inflation would translate into substantial upward pressure on pay, the EEF reported. Pay data for the three months to the end of June shows that the average pay settlement for the period was 2.5%, the same as for the three months to the end of May. EEF said the settlements could now be broken down into three distinct patterns. The proportion of settlements agreed at more than 3% continued to drift upwards to almost 1 in 5 settlements while, at the other end of the spectrum, almost a quarter of settlements were below 2%, with pay freezes still being agreed in 12% of settlements. EEF chief economist Lee Hopley said that while there was undoubted pressure to give higher settlements, there was an equal dose of realism among companies and their employees in response to economic uncertainty and competitive pressures. "As far as manufacturing is concerned at least, the Bank of England has little to fear from wage inflationary pressures," she added.