Pound keeps lid on pay awards

The high pound is holding down pay awards in the engineering sector despite widespread skills shortages and falling unemployment. Figures published by the Engineering Employers’ Federation show that average pay increases in the three months to March rose by just 0.1% to 3.5%. EEF employment affairs head David Yeandle said it was ‘unfair’ that Chancellor […]

The high pound is holding down pay awards in the engineering sector despite widespread skills shortages and falling unemployment.

Figures published by the Engineering Employers’ Federation show that average pay increases in the three months to March rose by just 0.1% to 3.5%.

EEF employment affairs head David Yeandle said it was ‘unfair’ that Chancellor Gordon Brown blamed industry for wages pressure, when it was really City stockbrokers who were taking the biggest rises in the form of huge bonuses.

Average pay awards in the broader manufacturing sector fell from 3.8% to 3.7%, according to figures from the Confederation of British Industry.

Yeandle said the latest engineering figures are significant because they include January, the most important month for engineering setttlements. They confirm a climate of wage restraint, despite pressures from skills shortages and falling unemployment and reflected competitive pressure from the pound and interest rates.

Almost 40% of manufacturers also believe that the inability to raise prices is keeping pay awards down.

An EEF trends survey last week showed that engineering unemployment was likely to rise next year as business growth declined and imports increased.

The EEF said average engineering wage increases rose for each of the three months from January to March, but were still well below the 4% or more average wage increases in the services sector.

Of 499 reported pay settlements for 67,910 engineering workers, the January average rise was 3.44%, February 3.49% and March 3.88%.