Engineers' pay settlements restrained

Engineering pay is bucking the trend towards higher earnings, according to a report released today. But the figures drew a sceptical reaction from industry observers.

According to the Engineering Employers' Federation, pay settlements in January were up 3.05 per cent on last year. Since July 1995, settlements have fluctuated around 3.5 per cent, while earnings rises in the economy as a whole have shot up to 5 per cent.

"Employers are maintaining their sensible attitude towards settlements in a time of economic uncertainty," said David Yeandle, head of employment affairs at EEF.

Not all analysts were convinced. "Engineers have seen extra money even though the level of settlements doesn't seem high," said one incomes expert. "The trend has been to keep basic pay increases down and to give more money to employees in other ways, such as bonuses and profit-related pay."

The EEF's report excludes these additions, although they lift take-home pay.

Alan Armitage, EEF's head of economics, said the strong pound's effect on exports did not explain engineering pay restraint since it could take 18 months for orders to reach completion.

Out of 407 pay settlements analysed by the EEF, 303 were 3 per cent or over.

In a survey of members of the Institute of Electrical Engineers, salaries of under 35s were up 5.5 per cent over the past year. Ken Smith, manager for professional development, said higher grades had suffered from delayering.

Research by the Institute of Civil Engineers is understood to have found that civil engineering, traditionally in the bottom half of the engineering earnings table, is on the verge of a recruitment drive following a growth in orders.

Mark Stracey, group manager of Thomas Telford, the endorsed recruitment agency of the chemical and civil engineering industries, said outsourcing was responsible for wage inflation in consulting and contracting engineering: "Pressure from City institutions has forced larger petrochemical companies to reduce strata of management and increase per-capita profitability by contracting out."

Bechtel, the general engineering group, recently gave all employees a bonus of up to 10 per cent to reflect exceptional company performance last year, and a shortage of calibre graduate engineers has forced British Aerospace to consider setting up its own university.

However, Peter Breen, partner in the executive search company Heidrick & Struggles, said EEF's figures were a good snapshot of an industry saturated with qualified engineers and starved of business-minded management talent.

"There's an oversupply of trained blue-collar engineers, but business- alert engineers are a rare breed. Finding an engineer with an MBA in Europe is like finding a hen with teeth. Most engineers are doing what they do because they consider it an intrinsically interesting job."