–EEF: UK Feb-Apr Manufacturing Avg. Pay Deal 2.5%; Jan-Mar 2.4%
–EEF: Around 80% UK Manufacturing firms’s Pay Deals Below 3.0%
LONDON (MNI) – UK manufacturing pay deals edged up in three months
through April, a key period in the pay calendar, to hit their highest
level since January 2009.
The average manufacturing pay deal came in at 2.5% compared to 2.4%
in the first quarter, according to EEF/JAM Recruitment data.
Private sector pay deals have picked up in the early months of 2011
in comparison to 2010. The Bank of England looked at a range of survey
evidence in its May Inflation Report and said average whole economy Q1
private sector pay deals were 2.3%. Last year, they held around 2.0%.
Manufacturing has seen stronger growth than services, and this may
be reflected in the size of the pay deals.
The EEF (formerly the Engineering Employers Federation) downplayed
the rise in pay deals.
“We have now been through the two single busiest months for wage
negotiations and there remains little evidence of significant upward
pressure on pay. Despite the small increase we are only returning to the
level of settlements we would expect to see by historical standards,”
Lee Hopley, EEF Chief Economist, said.
Although pay deals have risen, recent official data have shown
core average weekly earnings growth holding around 2%, which as the BOE
notes is “some way below its pre-recession average.”
Evidence that UK productivity growth has faded away, however,
suggests, on the face of it, pay growth would need to stay below
pre-recession levels to be compatible with the BOE Monetary Policy
Committee’s 2.0% target.
Geoff Dicks, chief economist at Novus Capital Markets, recently
cited the argument that “If productivity (growth) is as low as 1% and
imported inflation is above 2% then UK wage growth would need to be
below 3% to hit the 2% CPI target,” which he termed “a sobering
thought.”
–London newsroom 4420 7862 7491; email: drobinson@marketnews.com
[TOPICS: MABDS$,M$B$$$]
