Pay rises above inflation forecast, despite 11 Sept

Anticipated pay increases in most countries next year are still at least 2
per cent higher than projected rates of inflation, despite the events of 11
September.

A report by consultants William M Mercer reveals that in 33 out of 62
countries studied worldwide, projected pay increases for 2002 are more than 2
per cent above expected inflation rates.

Across the board, countries in the EU project moderate inflation of between
1.4 per cent and 3.8 per cent for next year and pay increases of between 2 and
5 per cent. One exception is Ireland, which is still in a period of record
economic growth and where expected pay increases during 2002 are 7.5 per cent.

In the UK, pay increases in 2002 are anticipated to be between 3.2 and 4.5
per cent, compared to an expected inflation rate of 2.1 per cent.

Safarina Kardany, senior researcher at William M Mercer, said the fortunes
of the US economy would have a knock-on effect in many countries. "Many of
our findings can be traced to how closely the economies of different countries
are linked to developments in the US.

"Forecasts for inflation increases represent our best estimates of what
we will see in 2002, but how they actually play out in many countries will have
much to do with the health of the US economy," said Kardany.

Projected pay rises in Eastern European countries are between 5 and 14.5 per
cent, but inflation increases are also expected to range between 2.6 per cent in
Lithuania and 20 per cent in Romania.

Canada and the US project pay increases of about 4 per cent, coupled with
inflation rates of 2.2 per cent.

In the Asia and Pacific region, China projects pay increases of nearly 10
per cent and inflation of just 1.4 per cent, compared to Japan where deflation
of -0.2 per cent is expected and pay rises of about 3 per cent.

www.wmmercer.com

By Ben Willmott

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