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Wages Councils

Volume 80: debated on Tuesday 11 June 1985

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asked the Secretary of State for Employment if he has received any further representations regarding the proposal to abolish or reform wages councils.

Will the hon. Gentleman confirm that there is little evidence that the abolition of the wages councils will create any real jobs? Does the hon. Gentleman not think that the Government would be better occupied in creating real and lasting jobs than in destroying the wages councils, which action will remove the protection for all trained workers?

No, Sir. I take this opportunity to point out that the movement of wages and costs, especially unit labour costs, throughout the economy makes a very substantial difference.

Has my hon. Friend read the recent survey of members of the Institute of Directors, which showed that 54 per cent. of those interviewed would employ more people if wages councils were abolished?

I am delighted to hear that. Most of those members already have the opportunity of doing that because they do not all operate in wages council industries.

Are statistics available for each travel-to-work area giving the number of people covered by wages council awards?

Does my hon. Friend agree that, if the United States had had wages councils, it would not have been able to create 10 million new jobs during the past 10 years? [Interruption.]

I wish that the hon. Member for Birmingham, Ladywood (Ms. Short) would stop answering my questions for me. As she has rightly pointed out, the United States has a national minimum wage. It is important to start looking at the real effects of minimum wage legislation, how it operates in this country and the age groups it most affects.

Will the hon. Gentleman confirm, or deny, that his Department is thinking about attacking the minimum wages paid to people under 21 so that their wages will be about the level paid to people under youth training schemes?

The hon. Gentleman should pay a little attention to the motives and success of the people in the electrical contracting industry, who freely negotiated a reduction in the starting pay and raised the number taking part in traineeships by three times in 18 months. So, the simple answer to his question is no.

If evidence is being called for, is my hon. Friend aware of the work done by Mr. Stanley Siebert of Birmingham university, who has estimated that there are about 230,000 jobs lost for teenagers because of the minimum wage structure established by the wages councils?

Yes. The important thing is to put people on the bottom rungs on the ladder and ensure that more have a chance to move up the ladder.

Given the large number of press leaks that we saw over the weekend, will the Minister tell the House what the Cabinet decided last week—if the Secretary of State has told him? Will the Minister confirm that it means that the current consultation is something of a sham? In reply to a large number of representations it was said that the system should not be weakened in any way. Those assurances have obviously been ignored because of the Cabinet's decision to legislate in the next Session either to weaken or to abolish the wages council system.

The difficulty in answering the hon. Lady is that hers is the only question to which she does not give the answer. The only person to whom I offered advice wrote an article that was exactly the opposite of what I said.

Will my hon. Friend accept that one of the defects of wages councils is the abnormally high rate fixed for school leavers, usually 60 per cent. of the rate for an adult trained worker, and that that precludes the employment of many school leavers?

Yes. It is worth recognising that most school leavers, or people of school leaving age, face four choices. They can stay on at school, getting no income whatever; they can try to get one of the jobs that are available, in a wages council industry or some other industry, at a fairly high rate of pay; they can stay on in education, at a college of further education, where they get less money; or they can use the youth training schemes, where they can get training to make them better qualified for employment. It is better to make sure that the wages that they get in wages council industries are not so high as to stop most of them getting their feet on the bottom rungs of the ladder and moving upwards.