Wages hit by economic downturn

20 November 2008

More and more employers are freezing or deferring wage increases, a new study has found.

According to the Engineering Employers’ Federation (EEF), one in four manufacturing firms have held off introducing wage rises in the last three months.

The study revealed that nearly 12 per cent of companies reported that they had deferred their pay settlements, the highest level since November 2001, and nearly 13 per cent of them had frozen pay, the highest level since December 2003.

As a consequence, the average level of pay settlements has fallen sharply to 2.8 per cent for the three months to the end of October, down from the revised figure of 3.1 per cent for the three months to the end of September.

David Yeandle, the EEF’s head of employment policy, said: “The severity of these changes over such a short period of time indicates the extent to which companies are having to take immediate action to control their costs. It seems hard to believe it is only a few months since fears about wage inflation were so prevalent.”