EEF, the industry body for manufacturing and engineering employees, has reported the effects of the economic downturn in its latest pay data for the three months ending October.

The Pay Bulletin contains information on 94 settlements covering 12,835 employees.

According to the report, 12 per cent of companies have deferred their pay settlement, the highest level for seven years, whilst nearly 13 per cent have frozen salaries.

The average level of pay settlement has fallen significantly to 2.8 per cent, down from the forecast 3.1 per cent for the three months ending September.

This is the lowest figure reported since June 2006.

David Yeandle, EEF head of employment policy, said: ‘The severity of these changes over such a short period of time indicates the extent to which companies are having to take immediate action to control their costs.

'It seems hard to believe it is only a few months since fears about wage inflation were so prevalent.’