Salary gap gets bigger

Pay awards in manufacturing are continuing to decline, suggesting there is little in the way of inflationary wage pressure in the economy to undermine the Chancellor's hopes of achieving sustainable growth.

However, the salary gap between managers and employees is continuing to widen, with managers' pay up by far more than the general pay level during the past 12 months.

The latest figures from the Confederation of British Industry's pay databank show that settlements in manufacturing in the third quarter averaged 3.2 per cent, compared with 3.5 per cent in the previous three months.

At the same time, productivity is increasing, with firms reporting a 4.8 per cent improvement in the past 12 months and forecasting a 5.2 per cent increase in the next 12. In the previous quarter, firms reported productivity gains in the preceding 12 months of 4.5 per cent.

Separate figures from a survey by consultants Sedgwick Noble Lowndes showed that managers' pay increased by 5.1 per cent in the past year, compared with a typical increase of around 3 per cent for non-managerial staff. Executives in general management, finance and personnel fared best.

According to the CBI, settlements in manufacturing have been on the decline since October last year, when they hit 3.6 per cent.

Pay awards in the service sector have, meanwhile, remained stable at 3.6 per cent in the second and third quarters.

The largest proportion of settlements in manufacturing - 77 per cent - were in the range of 2.5 per cent to 4.5 per cent while 66 per cent of all awards in service firms were in the same range.