Free to choose? Dimensions of private-sector wage determination, 1979-1994

Deregulation of the system of pay determination in Britain was started in 1 979 with the removal of incomes policy. The objective was to give employers the freedom to determine wage increases without the restrictions of pay no rms or statutory limits. Instead, companies would be able to link changes i n pay to the fortunes of the individual enterprise or establishment. By the mid-1990s, had these attempts to decentralize wage negotiations changed th e determinants of wage settlement outcomes in Britain? We address the influ ence of industrial relations institutions and labour market pressures on wa ge increases between 1979 and 1994 using evidence from the CBI's Pay Databa nk. Despite the direction of the Conservative Government's policy, the exte rnal institutional forces of the labour market, particularly the rate of in flation and comparability, appear to exert an enduring influence, both qual itatively and quantitatively, on pay determination.