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Minimum Wages

Volume 19: debated on Tuesday 2 March 1982

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asked the Secretary of State for Employment if he will review the role of the wages councils and minimum wages legislation in the light of the serious problems of youth unemployment.

The workings of the Wages Councils Act are kept constantly under review. The councils, which are independent of the Government, set minimum rates. They comprise employers, trades unions and independent members. The Government have made plain to all negotiators their view that excessive wage awards can only damage the employment prospects of young people.

Does my right hon. Friend agree that in many industries wages councils have set minimum wage levels above the rates that enable people to qualify for the young workers' scheme? Is there not a danger that that scheme will be undermined by the activities of the wages councils? Does he further agree that the employment prospects for young people in general would be greatly improved if minimum wages legislation for young people were done away with?

I agree with my hon. Friend that the young workers scheme holds out real and positive prospects for job opportunities for youngsters. I am glad that he endorses and welcomes that scheme. I assure him that very few wages councils of which I am aware have set minimum rates for youngsters that have the effect of excluding them from the young workers scheme. However, there are one or two. The attention of all wages councils has been drawn to the young workers scheme

Is the Minister aware that the 3 million people now covered by wages councils represent some of the lowest paid workers in Britain? Does not his decision last year to reduce by one-third the number of his Department's inspectors mean that even those low wages may not properly be enforced?

Many of those whose wage rates are fixed and covered by wages councils are paid well above the wages councils' minimum rates.

Is my right hon. Friend aware that many wages councils, such as the retail trade wages council, which covers the largest number of employees, decreed that a school leaver is automatically worth 60 per cent. of the weekly wages of a fully fledged experienced adult? Does he agree that that high starting percentage rate mitigates against youngsters?

I share my hon. Friend's anxiety and endorse the point that he made. It is one reason why all wages councils have had their attention drawn especially to the vulnerability of young people to statutory wage rates that effectively exclude them from any job opportunities.

Is the Minister aware that most wages councils award a minimum for youths of between only £30 and £40 a week, that during the past two years, when youth unemployment has increased, the differential between youth and adult wages has widened, and that in 1980 a working paper from his Department dismissed the importance of the role of wages in youth unemployment? Is there any hard evidence of the connection between youth wages and youth unemployment?

Common sense would decree that there is such a connection. The hon. Gentleman should consider the margin between rates for those under 18 and adult rates in the contract cleaning and laundry industries. The differential is only 10 per cent. Young people are paid about 90 per cent. of the adult rates. He should also realise that employers will not take on inexperienced school leavers aged 16 or 17 at wages close to the adult rate. We are convinced that the young workers scheme, which pays a premium to employers who take on young people at under £40 a week, will have a real and positive effect in giving job opportunities to youngsters.