Even though next year's federal pay raise remains on hold in Congress, the Labor Department yesterday offered a preview of the 2004 pay increase.

The department's Bureau of Labor Statistics reported an increase of 3.2 percent in wages and salaries of private-industry workers as measured over a 12-month period by its Employment Cost Index. Under federal pay law, the average civil service raise is calculated by subtracting one-half percentage point from the ECI. That would ensure federal employees of at least a 2.7 percent across-the-board raise in 2004.

The ECI is a broad measure of changes in labor costs, including salaries, health insurance and other employee benefits.

The annual calculation serves as a starting point for the next round of debate over federal pay. Congress and the White House use the calculation as a peg for their pay recommendations, but they do not always follow the process outlined in the 1990 Federal Employees Pay Comparability Act.

For instance, at the start of this year, President Bush recommended a 2.6 percent pay raise for General Schedule employees, even though federal pay law called for a 3.1 percent increase. Bush budget officials justified the 2.6 percent proposal on the grounds that many Americans would not be getting pay raises in a slumping economy.

Congress appears on track to provide federal employees with a 4.1 percent average raise, primarily because that is the amount the military is receiving. Lawmakers also took the "pay parity" approach in 2001, bumping up the president's 2002 pay recommendation and linking it to the military raise.

This year, federal employees received a 3.6 percent average raise. With "locality pay" figured in, Washington area federal employees received a 4.77 percent increase.

Next year's civil service pay raise has not received final approval, largely because of disputes between Democrats and Republicans over fiscal 2003 spending priorities. The House approved a 4.1 percent average raise, and the Senate appears ready to endorse it when lawmakers return from the midterm election break and take up appropriations bills.

Assuming that Congress approves and Bush accepts 4.1 percent, federal employees in the Washington area would receive a slightly larger raise after a locality adjustment. The Federal Salary Council, which advises administration officials on pay issues, has recommended that employees here receive a 4.27 percent pay raise next year.

The pay maneuvers have been partly caused by White House dissatisfaction with the federal pay law and the way locality pay increases are calculated in 32 areas. The locality adjustments, which can be worth thousands of dollars in salary and retirement benefits, were authorized by Congress as a way to bring federal salaries closer to private-sector pay.

The Office of Personnel Management, in a recent paper on federal pay issues, suggested that it might be time to rethink the government's salary framework. The paper, however, offered no proposals.

Under the current system, there is a 15-month lag between when the ECI figures are added up (in September) and when the pay raise takes effect (a year from the following January). Using the September ECI snapshot gives the White House time to consider trends in nonfederal pay as it prepares annual budget proposals. But some critics argue that the drawn-out process means the raise does not reflect labor market changes in the intervening months.

Retirement Mary Braden, director of the ethics program at the Justice Department, is retiring today after 30 years with the government, on Capitol Hill and in the executive branch.

Weekend Talk Shows Dennis Dollar, chairman of the National Credit Union Administration, will be the guest on "The Business of Government Hour" at 8 a.m. tomorrow on WJFK radio (106.7 FM).

"Support for the Combined Federal Campaign" will be the topic of discussion on the Imagene B. Stewart call-in program at 8 a.m. Sunday on WOL radio (1450 AM).

Stephen Barr's e-mail address is barrs@washpost.com.