Engineering pay awards fall to 18-year low

The level of pay settlements reported by engineering and manufacturing companies has fallen to 2% - the lowest level for 18 years - according to the latest figures from the EEF (Engineering Employers' Federation).

This is the lowest figure reported by EEF member companies since settlement levels were first reported in this format in 1984.

For the three months to the end of April 2002, the average settlement level was 2.0% compared to 2.2% for the previous quarter to the end of March. During the month of April 2002, usually the month in which the second largest number of settlements is usually reported, the average for the reported settlements was even lower, standing at only 1.8%.

In addition, over a third of companies either froze or deferred pay. Broken down, pay freezes accounted for just over a quarter of all reported settlements and 7% of companies reported that they had deferred their pay settlement.

EEF Deputy Director of Employment Policy, David Yeandle said: "The fact that engineering pay settlements have fallen to their lowest level since the EEF started to keep records in this format demonstrates very graphically that there are currently no wage inflationary pressures coming from this sector of the economy. It confirms our view that it is therefore far too early for the Monetary Policy Committee to be considering increasing interest rates."


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