Factory pay rises stay around 2.5pc

A study of almost 300 settlements by the Engineering Employers Federation revealed 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.

The employers organisation’s chief economist Lee Hopley said: “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.”

John Morris, chief executive of JAM Recruitment, said: “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.”

Fewer UK firms with between 50 and 500 employees are failing now than at the same time last year. The insolvency rate among firms with 101 to 500 employees more than halved between June 2010 and June this year from 0.17 per cent to 0.08 per cent, said information services company Experian.