WAGE STATISTICS

HC Deb 24 January 1957 vol 563 cc529-38

Motion made, and Question proposed, That this House do now adjourn.—[Mr. R. Thompson.]

10.28 p.m.

Mr. George Darling (Sheffield, Hillsborough)

I want to raise the question of the Ministry of Labour wages statistics, the figures of earnings which are published twice a year by the Ministry and which, in my view, are inadequate in their present form and to some extent misleading.

The figures which are published are taken the last week in April and the last week in October after a survey made twice a year of the earnings of wage earners in the main manufacturing industries. The figures are totalled, classified and published five months later, with similar figures for coal mines, railways, docks and agriculture.

For the purpose of the criticisms I want to make—and I will be as brief as possible—I will deal only with the figures relating to men, but the criticisms which I shall make apply to the other figures as well. As my first criticism, I would say that the figures are misleading.

In the Ministry of Labour Gazette, the last published figures for these manufacturing industries purport to show that the average men's wage in those industries was about £12 a week. I will use that figure to make it easy. That figure is, of course, used by Ministers, politicians, trade union leaders, employers and so on, and I suppose that, to some extent, it does guide Government policy when they have to deal with questions relating to earnings and income and expenditure from time to time. The figure is used to indicate that the average worker was getting about £12 a week when the figures were taken.

Of course, if all the workers were getting round about £12 a week the situation would not be too bad, but there is confusion here. I think those who use that figure are, in fact, confusing all sorts of averages. The figure we get from the Ministry is the average of all the men's earnings in the industries with which we are concerned, but the confusion comes with another average, the wage of the average group of workers; in other words, the common wage in industry. By the way in which this figure is presented in public speeches and the like, we are asked to believe that £12 a week is the common wage in industry.

I do not believe that the general run of wages is round about that figure—it is much lower. I can, I think, prove this point by taking the more detailed figures that are published by the Ministry of Agriculture for farm workers. There the figures are broken down into the proportion of workers who are getting different levels of wages, instead of giving just the national average.

In the last group of figures for agricultural workers published in the Ministry of Labour Gazette the national average was shown at £8 2s. 10d.; but if we look at the detailed figures it will be seen that more than half the workers got less than the average wage and, in fact, the common wage—the wage for the biggest group of workers—is about £7 10s., which is well below the average. That means that the majority of the workers concerned got less than £8 a week—well below the average.

I believe that the same sort of situation exists in all other industries, and is reflected in the figures given by the Ministry in its Gazette. For instance, of the £2 sections of industries for which the figures are given, it will be seen that for 85 of them the weekly wage is less than the national average of £12, and in the case of 26 it is less than £10 a week. I would assume from that that the general run of wages, the common wage, is well below the national average published.

As further proof of that we have the curious conflict between the Ministry figures for the engineering industries and those given by the engineering employers in discussions on the wage claim presented by the engineering unions. The employers figure is below that given by the Ministry. The explanation, of course, is that the range of weekly wages is very wide. It goes from, I should think, £6 a week in agriculture to about £20—and perhaps to more than £20 in a few very favoured occupations. That range of wages is much too wide to give a national average any value.

As I say, I am convinced that the most common wages in the various sections of industry are clearly below this average figure. In fact, the only purpose of the national figure, and it is a very limited purpose, is to serve as a measure of the general movement of wages. It will show whether wages as a whole are moving up or down.

Obviously the figures are incomplete. The Ministry goes to a great deal of trouble to get these figures. Twice a year it writes to about 70,000 firms and gets particulars of the earnings of about 7 million workers. Even so, it has to do a bit of juggling here and there to fill in the gaps in this comprehensive survey.

But there is something still missing. I suggest that what is needed in order to get a proper picture of the wages structure of this country from period to period is to get the number of workers on each different level of earnings. We know that the national average is £12 a week, but we do not know how many workers are getting less than £10 a week, for instance. We do not know how many workers are in fact, on the national average. No one knows. My own guess is that hundreds of thousands of workers in this country are still getting less than £10 a week, and I would say that the general run of wages will be below this national average.

What the Ministry needs to do is to ask firms to give the numbers of workers getting below £8 a week, then to get the numbers of those receiving between £8 and £9 a week, between £9 and £10 a week, and so on. Then everybody who is interested in wages policy and social policy would have the essential facts upon which to work.

The Parliamentary Secretary may say that to get this information from all these firms would involve them in a considerable amount of extra work, and he may be loth to suggest that they should do this. There may have been some force in that argument twenty years ago, but nowadays firms do not calculate wages by getting clerks to sit down with long strips of paper and add up figures with pencils and their brains. They use calculating machines. I do not think that the firms would be put to any great trouble in order to obtain the information which I am seeking.

I also want to save the firms some work. I suggest that the way to handle this job and to get more complete and better information for which I am asking is, instead of having a six-monthly comprehensive survey, to have an annual comprehensive survey, and then to take a group of carefully selected firms—two or three from each section of industry—so that they are as truly representative as one could get, to provide monthly returns. In most of the firms concerned—we might not need more than a few hundred—it would be possible for a comptometer operator and a wages clerk to get the figures out, perhaps working a few hours overtime once a month. There may even be a case for the Ministry paying for that work to be done.

We should then have monthly figures, which are very important. Not only would we get this extra information relating to the number of workers at each wage level, but it seems necessary to have more up-to-date figures which we can get by means of this method, provided the selection of firms is truly representative.

The figures on which we have to work are usually so out-of-date that they become valueless. For instance, in the next few months we shall have available to us only the wage figures of last April, nearly nine months out-of-date. Of course, there have been great changes in some industries since then. But even the figures that we shall get in March will refer back to last October. They will not be up-to-date; they will relate to the time before the Suez crisis was widely felt, for instance. We must wait until next October before we get any information at all on the effect of the Suez crisis on earnings in industry. Even then we may not get the information.

I must make a great supposition here, but let us suppose that we begin to get things going again in the beginning of April, and we get out of the recession which has occurred this winter as a result of the oil shortage. Then what has happened between October and April will not be reflected in the Ministry of Labour's wages statistics ever, because we just take the two counts in the last week of October and the last week of April.

This situation is wholly unsatisfactory. We want more regular figures and fuller figures, as I have said. I think we could get them through the method I have very briefly suggested. Of course, if this idea were adopted, it would be necessary to get the same kind of information from the railways, the docks, the mines, and from agriculture. I believe it could be done, not by asking these industries to take a comprehensive survey every month, but by selecting representative plants to give information about the movement of wages in their industries, having this comprehensive check once a year to make sure that the figures obtained monthly by this representative method are in fact accurate and show what is going on.

I suggest also that in the meantime—or, if nothing is going to be done, then for ever—Ministers and others should not use this national average produced by the Ministry as an indication of the common level of wages in the country. It is quite obviously inaccurate for that purpose. We need to have some idea of what the common run of wages is from month to month, but this national average does not give that information. I would suggest, therefore, that the Parliamentary Secretary should ask his right hon. Friend to look at the statistics which are now published with a view to arranging for their improvement.

10.42 p.m.

The Parliamentary Secretary to the Ministry of Labour and National Service (Mr. Robert Carr)

The hon. Member for Hillsborough (Mr. G. Darling) has raised an important matter. I know it is a matter on which he has asked Questions, and I think that when he asked his first Question we did not, perhaps, fully understand the point he was getting at. I can assure him that we do now fully understand it.

There certainly is a great difference between an average and what he calls a common wage. There is a danger of confusion which we must watch against. We in the Ministry of Labour want the information we get about wages and earnings to be as accurate and as complete as possible, and we certainly do not want it to be misleading.

I am sure that the hon. Gentleman will understand me when I say of the practical suggestions he has made that I cannot tonight do more than take note of them. I cannot pretend to make a judgment on them one way or another. He knows that we must take account of practical considerations in the work of getting the information we want, and I was glad that he put forward some suggestions about how the job might be done.

I am not a statistician myself—I have always found other exams easier to pass than mathematics exams—and I should not like to express a view on the statistical aspects of the hon. Gentleman's suggestions, any more than I would, at this short notice, offer a judgment on their practicability. I do, however, assure him that I will take note of his suggestions and see that they are considered. Perhaps we can correspond or have a discussion about them at some future time.

I should like to take advantage of this opportunity to say something more about the various statistics which the Ministry of Labour publishes about wages. We must look at the picture as a whole if we are to form a judgment about how complete or useful the information we have may be. We must look at the whole range of wage statistics and not consider one section in isolation.

First we must distinguish between wage rates and actual earnings. Figures of wage rates put into perspective some of the figures quoted about earnings if we look at the two together. The Ministry issues once a year a publication called "Time Rates of Wages and Hours of Labour," which gives a complete picture of rates of wages throughout industry. We keep that information up to date, month by month, by a section of the Ministry of Labour Gazette which shows the principal changes in wage rates.

In the Gazette, we also publish each month an index of weekly wage rates—another helpful figure. The hon. Member might like to know that we are about to introduce a revised index, which will be based on January, 1956, as 100. The present index starts off from the base date of June, 1947, as 100, and now stands at 166. Next month we shall issue a revised index which, for purposes of ease of comparison, will begin at 100 in January, 1956—that is, a year ago—because that was also the date when our new Index of Retail Prices started at 100. We think that that will be for the help and convenience of both sides of industry.

On wage rates, therefore, as opposed to earnings, we already publish and have available a fairly complete and accurate set of statistics, but it is earnings about which the hon Member is mainly concerned tonight, and, of course, what matters in this is what a man actually earns. That depends not only on the rate at which he is paid, but on the number of hours worked, production bonuses and all the rest.

Mr. Frederick Lee (Newton)

In the new index, will precisely the same criterion be used as in the old one?

Mr. Carr

Yes. The method will be the same, but the weighting of the different industries will be on a more up-to-date basis. The weighting in the old index, begun in 1947, was based on information from 1946. The weighting in the new index will be based on up-to-date figures, because we think that the 1946 figures may now, if they have not actually become unreliable, require to be looked at. We do not think there will be much difference as a result, but at least we will be sure that it is an up-to-date weighting.

As the hon. Member for Hillsborough said, on the question of earnings we normally make two inquiries per year, in April and October. As he also said, the work of digesting the information that we get is a big job and the results are not published until about five months after the inquiry. I certainly agree about the importance of statistics being as up to date as possible. The remarks made by my right hon. Friend the Prime Minister, when Chancellor of the Exchequer, about looking up trains in last year's Bradshaw show the way in which the Government and officials are thinking in that respect.

The regular six-monthly inquiries cover wage earners in all manufacturing industries. They also include some non-manufacturing industries, such as mining and quarrying (except coalmining), building and contracting, gas, electricity and water, transport and communications—with the exception of the undertakings of the British Transport Commission—and national and local government. The scope of inquiry is fairly complete, especially when it is remembered, as the hon. Member pointed out, that the National Coal Board, the British Transport Commission, the National Dock Labour Board and the Ministry of Agriculture, Fisheries and Food also conduct inquiries into earnings in their respective industries.

The purpose of these present inquiries of ours into earnings is to discover the general trend of actual gross earnings, and they do show this trend. The inquiries are not designed to measure short-period fluctuations. For the purpose of measuring the trend, it has always been considered that twice a year is sufficient. We have consulted industry about the possibility of having quarterly inquiries but it was concluded as a result of consultation that the value of such additional information as would be obtained from quarterly inquiries at the present time would not justify the extra time and cost both to employers and to the Ministry of Labour. So much for the frequency of the present inquiries.

As to the choice of dates, we have been guided by the need to select times of the year which are little affected by abnormal factors such as holidays, periods in which there is a high absence rate because of sickness, bad weather, and so on. The last pay weeks in April and October are generally thought to be the best ones to fulfil these conditions. Where, however, a firm or industry taking part in the inquiry has for any reason an abnormal pay week, the employers are asked to substitute figures for the nearest week of a normal character.

As the hon. Member said, the number of firms asked to provide information twice a year is about 70,000. That is not every firm in this range of industry. Roughly, it is every firm with more than ten employees, and a sample of firms with ten or less. Altogether there are 70,000 firms which we ask, and between them they employ about 7 million workers—rather more than two-thirds of the wage earners in this range of industry.

Each of these 70,000 firms supplies particulars of the number of wage earners at work in the specified week, their aggregate earnings in that week, and the total number of man-hours worked. The definition of aggregate earnings includes overtime and bonuses, and so on, before any deductions are made for Income Tax or for workers' contributions to National Insurance.

Employers are also asked to give the earnings separately for men of 21 and over, for youths and boys under 21, for women of 18 and over and for girls of under 18. Having obtained this information from the 70,000 employers the Statistics Department of the Ministry of Labour then can compute the average weekly earnings, the average hours worked, and the average hourly earnings for each category of workers—men, boys, women and girls—in each of the separate industries involved.

I want to emphasise that the results thus obtained are general average earnings for each category of manual wage earners. This is something the hon. Member will know, but which is worth emphasising. The figures we can provide are average earnings of all workers covered by the inquiry in each industry concerned. These inquiries do not provide separate figures for workers in each different occupation within each industry.

The next point I want to emphasise—and this brings me to the main point raised by the hon. Member—is that since these earnings figures of ours are obtained as a result of dividing the total wages bill by the number of workers, they do not and cannot provide information about the numbers of workers at particular levels of earnings. They do give a true average, but they do not give the numbers at each level. As the hon. Member has pointed out, it is possible to know the average and yet the majority of the people can be getting other than the average, more or less. It depends largely on the scatter within the group.

I think that this is definitely a gap in our information, but the information the hon. Member wants, as he realises, can be obtained only by means of inquiry into the actual earnings of each individual worker. I will consider the methods he has suggested, as I said. Inquiries of the kind he spoke of have been carried out on three occasions in this country, in 1886, 1906 and 1938. Inquiries of that kind require a great mass of detailed information to be obtained and subsequently analysed, and could not be undertaken at frequent intervals unless we can find some new and easier methods. That is one of the limiting factors.

We realise that the 1938 figures, which were the last we have of this kind, are obviously out of date because of what has happened in industry and in the economy since. I think a strong case can be made for having another detailed inquiry of the 1938 kind, and I can tell the hon. Member that we shall now proceed to consider, in consultation with the British Employers' Confederation, the possibility of extending the scope of our normal inquiry in October of this year to provide information about the pattern of individual earnings as well as the average. After consulting with the employers, and if it seems a reasonable thing to do, we shall try to extend our autumn inquiry this year to get the pattern of earnings such as the hon. Member has asked for. But as long as we have to do it in the way we think we shall have to do it in October, that will have to be the only occasion for a considerable time to come. Though I cannot give any undertakings at all, we will consider the various methods which the hon. Member has mentioned in case they afford a way of obtaining information on a more regular basis. I hope that the hon. Member will take some comfort from it, but at the moment all I can say is that we shall consult employers and try to extend the October inquiry this year to obtain information such as he requires.

Question put and agreed to.

Adjourned accordingly at five minutes to Eleven o'clock.