Average pay deals in manufacturing firms have remained steady at 2.5 per cent in recent months, figures show.
A study of almost 300 settlements by the Engineering Employers Federation (EEF) revealed that most were between two per cent and three per cent, a handful were worth over four per cent, while around one in eight involved a wage freeze.
EEF chief economist Lee Hopley said: “After a period of gradual increases, settlements appear to have levelled out below the long-term normal range. Whilst there is undoubted pressure to give higher settlements, there is an equal dose of realism amongst companies and their employees in response to economic uncertainty and competitive pressures.
“As far as manufacturing is concerned at least, the Bank of England has little to fear from wage inflationary pressures,” Hopley said.
John Morris, chief executive of JAM Recruitment, which helped with the research, added: “Although pay settlements may appear to be levelling out, we’re seeing a more candidate-led market where employees know that there is growing demand for their valuable skills.
“Another trend we are noticing is that because candidates know that they can often command higher wages as a contractor rather than a permanent member of staff they are often more willing to take on temporary work.”