Manufacturing firms are freezing wages
A survey by the Engineering Employers Federation has found that nearly 66% of UK manufacturers are freezing the wages of their employees. The report indicates that a small number have actually reduced the wages attributed to their employees, while some have increased wages slightly, but the vast majority have introduced pay freezes or increases just above 0%.
When you consider that UK manufacturing sector has been under pressure for many years, the ongoing recession was probably the "straw which broke the camel's back". The average pay settlement in the sector fell from 0.9% in the three months to May to 0.7% in the second quarter of 2009. Unfortunately, it seemed as though the settlement increases will fall further in the short to medium term as companies look to retain as much cash as possible and ensure they are able to battle through the demise in trading.
How quickly manufacturers will respond to an increase in economic activity remains to be seen because while many sectors have been pulled down because of the recession, UK manufacturing has been in decline for many years. The UK has moved from a predominantly manufacturing led economy to a services led economy. The authorities have been criticised on numerous occasions for a lack of support for the UK's manufacturing base although whether this will change in the future remains to be seen.
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