Average pay settlements in Yorkshire engineering are now below the Government's inflation target, according to industry leaders.

The Engineering Industry in Yorkshire and Humberside claims average pay settlements in the region in recent months were running at under 2.5. per cent - the target for inflation in the current year.

Director Ian Hughes said: "I think these figures demonstrate the fact that there is a great deal of realism abroad.

"People who work in engineering have to be aware that the industry has been going through a difficult period, with high sterling values making it particularly hard to win over new export orders."

Given such a climate, settlements needed to be modest to allow companies to try to maintain their competitive edge, said Mr Hughes.

"In some companies, the payroll and the energy bill are two of the areas which can apply serious pressure to margins.

"Obviously, the position can vary widely from company to company.

"It is clear that some businesses are still finding work, at sensible prices, difficult to get.

"In four cases, management and workforce have agreed a pay standstill for 1999-2000 - clear evidence that some parts of Britain's most important wealth creating sector are still experiencing hard times."

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