asked the Chancellor of the Exchequer what representations he has received concerning the Treasury document, "The Relationship between Employment and Wages".

My right hon. Friend the Chancellor of the Exchequer has received a number of letters about this document.

asked the Chancellor of the Exchequer whether he will explain how real wages can fall if the demand for labour exceeds the supply, as discussed in paragraph 2.24 of his Department's paper on the relationship between wages and employment.

Clearly real wages do not depend simply on the relationship between labour demand and supply or they would have been falling in recent years. Even if labour demand exceeds supply, real wages might still fall temporarily if, for example, there were an external shock to the price level.

asked the Chancellor of the Exchequer to what extent the model used in his Department's study of the relationship between employment and real wages assumes imperfect competition and increasing returns to scale.

The labour demand functions which were contained in the model used in the Treasury's study of the relationship between wages and employment are consistent with constant returns to scale. The model as a whole assumes price setting behaviour which is consistent with the assumptions of imperfect competition.

asked the Chancellor of the Exchequer what action he intends to take in the light of the recent paper by Her Majesty's Treasury, "The Relationship between Employment and Wages."

This paper demonstrated clearly that slower increases in real pay will lead to more jobs; a point which needs to be more widely understood. The Government are doing all in their power to make labour markets work better and help bring this about.