Manufacturing pay settlements averaged 2.8 per cent during the final quarter of 1992, according to the CBI pay databank. This was the lowest figure since the survey began in 1980 and bodes well for continued low inflation. Lower labour costs should help offset the boost to import prices from the fall in the pound.
Pay settlements decelerated more sharply in the fourth quarter of 1992 than at any time for nearly two years. Pay settlements had averaged 3.9 per cent in the third quarter and were as high as 9 per cent as recently as late 1990.
Manufacturers said output per worker was 3.9 per cent higher in the second half of 1992 than a year earlier. This was the highest productivity growth figure since the end of 1991. Nine tenths of employers expect to maintain or raise productivity growth in the coming year.
Service sector pay deals also decelerated at the end of last year, averaging 4 per cent in the second half, down from 4.4 per cent in the first. Service pay settlements peaked at an average of 9.2 per cent in the second half of 1989 and began dropping sharply in 1991.
The figures suggest that the official measure of average earnings growth may have further to fall, after dropping to 5 per cent in the year to November.Reuse content