Manufacturing wages defy UK-wide earnings collapse

“After many challenging years, manufacturers are also 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 affordability will remain a key consideration in future pay deals as manufacturers grow in confidence that the recovery is secure.”

The increase is above the 2.4pc award made last year, and the number of businesses imposing pay freezes on staff more than halved, down to 6.4pc of the 331 companies employing a total of 68,000 staff, compared with 14.6pc a year ago.

However, the lack of suitable labour is creating wage pressure in the sector, and staff with engineering skills have regularly been cited as some of the most in demand by the monthly REC/KPMG jobs report.

“It is almost impossible to find any manufacturer who is not experiencing acute skill shortages,” Ms Hopley added. “As a result, employers are responding to this by paying top whack to retain and attract highly skilled staff.”

The findings come less than fortnight after Bank of England Governor Mark Carney said earnings growth in the wider economy had been “remarkably weak, even as unemployment has fallen rapidly”, as the central bank released its quarterly inflation report.

The Bank used the report to cut its forecast for annual earnings growth in the final quarter of this year from 2.5pc to 1.25pc. Pay growth in 2015 is expected to strengthen to 3.25pc, slightly lower than its previous forecast.

Mr Carney also signalled that interest rates rises are still some way off, saying that the bank would place more emphasis on wages when it assessed the health of the economy.

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