Research Shows Sector Leads Way In Pay Rises

SMEs in the manufacturing sector may need deeper pockets than their counterparts in other parts of the economy when it comes to pay and rewards, according to a new study.

A poll by the manufacturers' federation EEF of 331 firms and 68,000 employees has found the typical annual pay rise in the six months from February to July 2014 was 2.6 per cent. This includes April, which is when many firms carry out their annual pay rounds as it corresponds with the start of the financial year.

The figure is up on the equivalent period last year when the average was 2.4 per cent and the survey also found the number of pay freezes and deferrals continued to fall, dropping from 14.6 per cent to 6.4 per cent.

EEF noted that this contrasts with wider economic survey data suggesting the typical worker is continuing to see remuneration drop in real terms due to small pay rises or ongoing freezes. It said the manufacturing sector data was an indication that employers were keen to reward loyal staff after several difficult years and are in many cases paying a premium to help compete for staff with scarce skills.

National head of employment and industrial relations at EEF John Neild said: "After many challenging years, manufacturers are now literally paying their employees back for their support to keep jobs and businesses going.

"Business across the sector has clearly been on the up but this new post-recession landscape is, however, presenting employers with a new set of challenges in managing relationships with their employees."

The most recent data on pay produced by the Office for National Statistics showed a very different picture for the level of remuneration, albeit not a like-for-like comparison with the EEF data as it covered the three months from April to June.

During this period, average pay settlements ran at only 0.6 per cent, the lowest figure recorded since such statistics were first collated in 2001.

Expert Opinion

This is the latest in a series of studies to put a spotlight on trends in the manufacturing sector and highlights how the area is shaping up in comparison to other industries. <br/> <br/>"While many small businesses in the sector have worked hard to come through a difficult few years, growing optimism and confidence in manufacturing shifts the landscape and creates a new set of concerns for them. Remuneration is of course a vital part of business and allows many firms to ensure that the contribution of individuals within their organisation is recognised accordingly. <br/> <br/>"This is one of the many areas where SMEs should not ignore the importance of quality legal advice, with lawyers being able to provide support to ensure the right HR policies and practices are in place so any changes to salary or other employment conditions always comply with the necessary regulations. Failure to get such issues right can have significant consequences." Dorrien Peters - Partner