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Employment Disincentives

Volume 410: debated on Friday 19 September 2003

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To ask the Chancellor of the Exchequer what assessment he has made of the effects on (a) wage inflation, (b) labour market productivity and (c) the economy of the disincentive for those on low incomes to change jobs because of short term cash flow problems. [129861]

:The Government are committed to making work pay and to supporting low-income households in sustaining employment. The new tax credits help low-income families and working households by providing targeted financial support according to need and are designed to reduce households' uncertainty about their income when circumstances change. The Government are also encouraging low-income households to save more, helping them to deal with short-term cash flow problems. No assessment has yet been made of the impact of these policies on wage inflation, labour market productivity or the economy.