Bankers’ pay is soaring while engineers’ falls

Sheffield Political Economy Research Institute  research fellow, Dr Craig Berry
Sheffield Political Economy Research Institute research fellow, Dr Craig Berry
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Manufacturing pay in the UK is continuing to decline while pay for city bankers is soaring, according to a Sheffield University academic.

New research by the University’s Sheffield Political Economy Research Institute found manufacturing increasingly characterised by lower-skilled work, with pay levels that suggests the industry is becoming less productive relative to other sectors.

SPERI Research Fellow Dr Craig Berry said: “In 2011 George Osborne promised a ‘march of the makers’ as part of economic rebalancing. The coalition government’s ‘plan for growth’ promised a focus on developing advanced manufacturing.

“But the latest evidence on pay suggests that the UK manufacturing sector is becoming less productive relative to other sectors, and is characterised by low-skilled work. At the same time, the City has returned to business as usual.

“The failure to rebalance the economy in terms of sectors also represents the failure of geographic rebalancing. The manufacturing sector is concentrated in the north and the midlands, but the government’s growth strategy appears to favour the London-based finance and real estate sectors.

“This analysis should worry all of those interested in developing a more sustainable model for economic growth in the UK.”

Dr Berry’s research also found that while pay in the housing and property sector remains behind manufacturing, there is evidence that it is catching up.

What’s more, the number of jobs in those two sectors grew by 16 per cent last year.

Dr Berry concludes that highly skilled workers are more likely to be attracted away from the “tradable and technology-intense manufacturing sector,” and towards a relatively low-skill sector with poor job security where they can earn more money.

The Speri study, which can be viewed at http://speri.dept.shef.ac.uk/publications/policy-briefs/, is based on data from the Monthly Wages and Salaries Survey, from the Office for National Statistics. Survey data shows that manufacturing workers were paid around 20 per cent more than the national average at the beginning of 2000, but this had fallen to around 15 per cent by September 2013.

Meanwhile, the pay gap between the finance and insurance sector and the national average has largely been maintained. It fell from around 90 per cent in January 2000 to around 70 per cent in September 2008, but has since recovered to around 85 per cent.

Manufacturing workers typically earn 37 per cent less than finance and insurance workers – up from 34 per cent in the past five years.