Manufacturing sector most likely to cut pay in 2009

The manufacturing sector has stood out as the most likely to make pay cuts this year, after a study of basic salary awards across all sectors found pay deals had reached an all-time low.

A survey by Personnel Today’s sister organisation pay specialists Industrial Relations Services (IRS) found the median pay award for manufacturing dropped to 0% in the three months to April, from 3% the previous quarter. In April alone, manufacturing suffered the biggest slump in pay awards compared to other sectors surveyed: 24 of the 54 pay deals in the sector were pay freezes, and three employers resorted to pay cuts, close to record numbers set in 1993.

The median basic pay award across public and private sectors stood at 1.5% over the last quarter, down from 3% over the previousquarter, and the lowest on record since the study began more than three decades ago. Eight in 10 (80%) settlements were found to be lower than they were for the same employee group the previous year.

IRS Pay and Benefits deputy editor Sarah Welfare warned it was “highly possible” that manufacturing would seepay cuts in the coming months.

“Given that half of the manufacturing awards were pay freezes, and we have many more pay deals yet to be settled, we could well see the impact of the recession pulling these figures below 0.0%,” she told Personnel Today.

But David Yeandle, head of employment policy for manufacturers’ organisation EEF, warned employers against making pay cuts.

“Unions and employee representatives have shown flexibility in accepting pay freezes to save jobs, which hasn’t happened in previous recessions, but there is a limit to how low they can go,” he said.

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