WAGE RATES show the trends

An important element of any plant cost index is the actual labour cost incurred throughout a project's construction cycle. Just how important can be gauged from the brief selection we present this month of average wage indices in a number of important regions around the world.

The first of the graphs shown alongside illustrates UK wage indices for the mechanical, electrical, construction and public administration sectors of the economy, referenced to a base date of 1995 = 100. Taking an `average of averages' from these data suggests a wage inflation rate of just over 4 per cent per year over the last seven years, which is in line with current trends.

From the other graphs it can be seen that wage rates generally also reflect specific trends affecting different regions of the world. From North and Central America for instance the relative strengths of the US and Canadian economies compared with that of their poorer neighbour to the south is quite striking - and certainly goes a long way to explaining the illegal flood of Mexican migrant workers into the US.

The current collapse of the Korean economy, which has seen that country's inward investments into the UK drastically cut back, could also arguably have been foreseen by monitoring the country's rapidly escalating wage rates in comparison with those of its economic neighbours.

Although all is clearly not well with the Japanese economy at the moment, its problems could not be said to be caused by rampant wage inflation, with the graphs showing only a 10 per cent rise since 1993.