PAY settlements continue to edge upwards and could threaten recovery

in the jobs market, the Confederation of British Industry claimed

yesterday.

Figures from the CBI Pay Databank suggest that the effects of rising

pay deals on competitiveness are being masked by continuing productivity

growth in manufacturing.

For the three months ended in November, manufacturing pay awards

averaged 3.5% against an average of 3.3% in the three months ended in

October and 2.3% a year ago. Comparable rises in productivity were 3.7%

in the second half of 1994 and 4.7% a year earlier.

In the services sector including finance, catering, communications and

retailing, the CBI survey found that pay rises were even better with

improvements of 4.3% in the last three months to November compared with

an average of 3.7% in the third quarter.

''With price rises low, British workers are receiving bigger real

rises that the employees of our major competitors -- many of whom are

now accepting real cuts in pay'' commented CBI employment affairs

director Mr Robbie Gilbert.

UK unit labour costs have fallen by 2% over the past year which in the

past would have given an exceptional boost to our competitiveness.

However the Germans and others have cut their labour costs by 6%.

''That is the competitive standard our businesses have to meet today

to protect incomes and jobs in the longer term'', he added.