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Unit Labour Costs

Volume 21: debated on Tuesday 30 March 1982

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asked the Chancellor of the Exchequer whether the evidence on which he based his view that unit labour costs in manufacturing rose hardly at all in 1981, Official Report, 9 March, column 729, showed any difference in the case of the export industries; what effect the improvement in unit labour costs had on export competitiveness; what was the year-on-year increase in the export price of finished manufactures in December 1981; and what were the reasons for any increase over and above the increase in unit labour costs.

For the evidence on the rise in United Kingdom unit labour costs in manufacturing in 1981, I refer the hon. Member to my answer to his earlier question on 24 March. The information available does not differentiate between manufacturing firms that export and those that do not. The slow down in the growth of United Kingdom unit labour costs will be a favourable influence on manufacturing competitiveness and will also contribute towards lower domestic inflation. As measured by relative—actual—unit labour costs, competitiveness in 1981 Q3—the latest quarter for which figures are available—was around 10 per cent. better than at the end of 1980. The improvement reflected both slower growth in United Kingdom unit labour costs relative to most of our competitors and a lower exchange rate. Figures for manufactures export prices—unit value indices—are published in the "Monthly Review of External Trade Statistics", tables B11 and B12. In general, there is no reason to expect an exact correspondence between movements in unit labour costs and changes in exports prices. Differences may be associated with changes in profit margins on exports, but might also reflect changes in non-labour costs.