Finance & Business World

U.K. manufacturers are freezing workers’ pay on a record scale after the recession throttled factory production, the EEF lobby group said.

Two-thirds of manufacturing companies awarded no wage increases in the second quarter, the most since the EEF started surveys of pay bargaining in 1987. The average raise dropped to 0.7 percent from 0.9 percent in three months through May and will likely keep falling, the group said today in London.

Business Secretary Peter Mandelson said today that manufacturers from steel companies to automakers face “quite a severe recession” and he pledged support to help them “maintain capability.” The economy shrank the most since 1958 in the first quarter and Bank of England Deputy Governor Charles Bean said this week that the recovery may be a “long haul.”

“This unprecedented high percentage of manufacturers freezing pay and the resultant historically low level of average pay settlements are clear signs of the adverse impact that the economic downturn is continuing to have on the manufacturing sector,” EEF Head of Employment Policy David Yeandle said in a statement. “Manufacturers are trying to manage pay far more flexibly that they have done in previous recessions instant payday loans.”

The report also showed that 16 percent of companies have deferred pay settlements, the EEF said. The group surveyed 240 wage agreements covering 55,405 employees.

Manufacturers have also shed staff to weather the production slump. The total of factory workers fell 201,000 from a year earlier to 2.68 million in the three months through May, the lowest since records began in 1978, the Office for National Statistics said on July 15.

Jaguar Jobs

Jaguar Land Rover, the U.K. luxury carmaker owned by Tata Motors Ltd., said on July 15 it plans to eliminate 300 jobs and end production of the Jaguar X-Type model sooner than planned as demand slumps.

The prospect of further job losses is keeping pay down across the economy. Excluding bonuses, earnings rose an annual 2.6 percent in the quarter through May, the least since records began in 2001.

Hays Plc, the U.K.’s largest recruitment company, said July 9 that all staff including executives will endure a pay freeze after the amount of fees it collected declined at a faster pace.

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