PAY deals for thousands of East Lancashire factory workers have hit their lowest level for at least 20 years, new research showed today. And while manufacturing workers' pay rises are being squeezed, pay deals for staff in service industries have kept on rising.

The figures emerged from the latest pay survey by the Confederation of British Industry. The CBI's pay data bank survey showed the average pay settlement for manufacturing staff in the three months to December was two per cent, its lowest since the survey began in 1980. But in the service sector - covering industries from banking to catering and retailing - the average pay settlement was four per cent.

Kate Barker, CBI chief economic adviser, said: "Manufacturers are holding a firm line on basic pay rises in the face of strong sterling and continued competitive pressures." The CBI's survey showed manufacturers blaming the low pay settlements on price competition and a squeeze on their profits. Almost half, 47 per cent, said they had been unable to increase their prices since last August, so reducing the pay deals they could afford, and 39 per cent said they were constrained by their own low profits.

Last week official figures from the Office for National Statistics showed average earnings rising strongly. The CBI's regular pay data bank survey covers 1,500 pay settlements made each year in private industry.

Converted for the new archive on 14 July 2000. Some images and formatting may have been lost in the conversion.