§ Ms KellyTo ask the Chancellor of the Exchequer what assessment he has made(a) of the contribution of wage drift to the recent increase in average earnings and (b) of the current methods employed by the ONS in its seasonal adjustments. [4577]
§ Mrs. LiddellThe information requested falls within the responsibility of the Chief Executive of the Office for National Statistics. I have asked him to arrange for a reply to be given.
460WLetter from Tim Holt to Ms Ruth Kelly, dated 24 June 1997:
The Chancellor of the Exchequer has asked me to reply as the Director of the Office for National Statistics to your recent question on the contributions of wage drift to the recent increase in average earnings and the current methods of seasonal adjustment employed by the ONS.It is difficult to decompose reliably whole economy average earnings into wage drift and pay settlements because we do not have adequate information on whole economy settlements. Consequently, ONS does not estimate the contribution wage drift makes to increases in average earnings. We monitor the general level of settlements in the economy, which have been relatively stable over the last year or so. This suggests that recent increases in average earnings have been, in part, due to wage drift and particularly larger bonus payments, especially in the financial services sector.The ONS currently publishes a seasonally adjusted series of average earnings growth and an underlying rate, which attempts to adjust for temporary influences such as arrears of pay and variations in the timing of bonus payments. A recent review of the monthly wages and salaries survey, from which earnings statistics are derived, recommended that ONS should consider moving to X-11 ARIMA seasonal adjustment software for earnings data; this is currently being evaluated. X-11 ARIMA is one ONS's standard method of seasonally adjusting time series.