Wage surprise

Article Abstract:

UK inflation could be pushed up by wage rises, but the threat of higher wages could be exaggerated, according to HSBC Markets. The labor market is tightening but this is exaggerated by official figures which give a lower rate of unemployment for the claimant count than the International Labor Office survey, and a higher figure for vacancies. Price inflation will affect wage claims, and price inflation is low. Job shedding by manufacturing companies and a pay freeze in the public sector will also restrain pay deals.

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The puzzle of Britain's wage inflation

Article Abstract:

UK wage inflation is low despite a drop in unemployment. This has been attributed to job insecurity, though pay is increasing faster where there is competition from abroad, in manufacturing industry, and labor union reforms occurred in the 1980s rather than the 1990s. Other economists argue that the natural level of unemployment has dropped, but it is difficult to measure this level. Memory of recession may curb wage demands as happened in the 1940s when employment rose but there was a memory of the 1930s slump.

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Productivity gains set to slow

Article Abstract:

UK wage rises have been lower than average during the 1990s but could rise to 5% in 1995 from between 3.5% and 4% in 1994. Manufacturing industry is seeing wage rises of 5% though productivity rises have meant falling unit labor costs to 1994. Labor shortages mean that costs are rising in 1995 and this is exacerbated by companies working near full capacity. Service industries have seen lower wages rises and lower gains in productivity. Disposable income looks set to rise, which will boost consumer spending.

Industrial productivity

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