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Monday, 15 October, 2001, 02:05 GMT 03:05 UK
Pay deals remain 'stable'
Salary advice slip
Wages are holding steady, damping down inflation fears
Pay deals in the UK are remaining stable, indicating that inflation is likely to remain firmly under control, new data suggests.

Two surveys - one from the UK's bosses' organisation, the Confederation of British Industry, and one from the research group Incomes Data Services - show that recent pay rises are remaining in a band between 3% and 4%.

According to the CBI, that confirms that the economic slowdown is beginning to bite.

But the organisation also points out that that should leave the Bank of England with plenty of headroom for further cuts in interest rates to stimulate the economy.

Subdued

Both surveys cover the third quarter, from July to September, of this year.

IDS says that more than 60% of the pay deals it has examined were in the 3-4% range, with the rest more or less equally divided between high and low settlements.

The pattern is little changed from a year ago, it says.

The exception is the civil service, where a number of departments have awarded pay rises above 4%.

But many civil servants spent much of the 90s with pay increases barely exceeding the rate of inflation, and are now playing catch-up.

Split economy

As for the CBI's data, that clearly demonstrates the split in the economy between services firms and those involved in manufacturing.

Manufacturing has been in the doldrums for some time - partly because of the strength of the pound, which makes exports unattractive - and is being sharply affected by the current downturn.

The CBI's figures showed that manufacturing pay rises were 2.9% on average in September, down from 3.1% at the same time last year but higher than the 2.7% seen three months ago.

Over two fifths of firms said their inability to boost prices was depressing wage settlements.

Services, on the other hand, saw an average 3.7% rise, lower than both the 4.1% of September last year and the 3.9% in June 2001.

The key driver was the need to recruit and retain staff, the CBI said.

See also:

12 Oct 01 | Business
Rover workers reject pay deal
09 Oct 01 | Business
British Airways to cut workers' pay
29 Aug 01 | Business
Executive pay rises 28%
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