The Confederation of British Industry's latest pay databank, published today, shows that settlements in manufacturing averaged 2.9 per cent for the three months to the end of October - well below the headline rate of inflation. The figure compares with 3.3 per cent for the previous three months and 3.6 per cent in the same period a year ago. The figures will come as a welcome fillip for the Chancellor, Kenneth Clarke, as he seeks to fend off pressure for a further increase in interest rates to choke off rising inflation in the run-up to the election.
More than a third of firms said that the main constraint on the size of pay awards was their inability to increase prices while one in four said low profits were affecting settlements.
The CBI also reported that pay awards in service industries had remained stable since the start of the year. They averaged 3.5 per cent in the three months to the end of October compared with 3.6 per cent in the previous quarter.
Separately, Peter Hain, Labour's spokesman on employment, issued a fresh jobs warning, claiming that more than 150,000 workers faced the axe in the new year. He said the job losses covered every sector of the economy from construction and financial services to manufacturing industry and retailers. The list had been compiled from announcements and government documents.
"Redundancies continue to be announced in all areas. The UK is losing skilled, permanent jobs and new work is part-time and often badly-paid."