Factory pay deals hit record low in June

LONDON (Reuters) - Average pay deals in the manufacturing sector fell to a record low of 0.7 percent in the three months to June as an unprecedented two thirds of manufacturing firms froze pay, a survey showed on Friday.

The Engineering Employers Federation said the average pay settlement was the lowest since it started publishing pay data in 1987 and sharply down from a peak of 3.2 percent in the three months to September 2008. It was 0.9 percent in the three months to May.

The survey, which is based on 240 pay settlements covering 55,405 workers, also showed that 16 percent of companies deferred pay deals over that period.

EEF said pay deals in May and June alone were also at a record low of 0.5 percent and it expected further falls going forward.

"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," said David Yeandle, the EEF's head of employment policy.

"The figures also show that, working with employees and their representatives, manufacturers are trying to manage pay far more flexibly that they have done in previous recessions."

(Reporting by Fiona Shaikh; editing by Patrick Graham)