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Economic Outlook 1990–1994: The London Business School with Gower Publishing: Forecast Release: THE 1991‐92 WAGE ROUND
Author(s) -
Burrell Andrew
Publication year - 1991
Publication title -
economic outlook
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.1
H-Index - 8
eISSN - 1468-0319
pISSN - 0140-489X
DOI - 10.1111/j.1468-0319.1991.tb00613.x
Subject(s) - economics , deflation , wage , earnings , depreciation (economics) , labour economics , recession , monetary economics , macroeconomics , monetary policy , finance , capital formation , financial capital , economic growth , human capital
The current wage round begins under circumstances markedly different from the previous one. A year ago the Department of Employment measure of the underlying growth in average earnings was, at 10 per cent, higher than at any period since the 1979‐80 pay explosion. Following the invasion of Kuwait there were considerable dangers that cost pressures would initiate a wage‐price spiral. In the event the hike in oil prices had only a small and temporary effect on headline inflation rates, which was more than offset by deflationary pressures resulting from the worse‐than‐expected economic downturn. In addition, UK entry to the ERM in October meant a major shift in the conduct of economic policy. The need to maintain the pound at its high central parity introduced extra discipline into pay‐bargaining by ruling out the accommodation of uncompetitive wage rises through depreciation.