Tenth of manufacturers still wary of upping pay

More than one in ten manufacturing firms are still hitting staff with a pay freeze amid lingering nerves over the UK's weak recovery, according to new figures.

The EEF manufacturers' organisation's latest survey – encompassing 207 companies employing more than 34,000 staff – showed average settlements of 2.3 per cent in the three months to February. But 22 firms – 11 per cent – kept salaries where they were.

The findings underline the absence of upward pressure on wages despite inflation of 2.8 per cent, more than twice as high as the average growth in pay across the economy as a whole.

Manufacturers in particular are under pressure as the UK struggles to avoid a triple-dip recession. The sector accounts for around 11 per cent of the nation's output but shrank 1.5 per cent in January, the biggest slide since a Jubilee-affected June last year.

Lee Hopley, EEF chief economist, said: "The main bargaining period for manufacturing companies is passing with no evidence of pay pressures despite the increase in the cost of living. These figures continue to suggest a cautious outlook for many companies who are bearing down on their internal costs, particularly those that continue to operate pay freezes."