§ 8. Mr. Ashton
asked the Secretary of State for Employment what evidence he has on the relationship between the workers at present unemployed and those in receipt of the largest pay increases.
§ Mr. R. Carr
It is self evident that excessive wage rises unmatched by increases in productivity drive up costs and therefore contribute to unemployment.
§ Mr. Ashton
Is the Minister aware that this is the second time he has produced no evidence, although he claims that what he has said is self-evident? The right hon. Gentleman produced no evidence on Monday and named no factories. Why do London and Birmingham have the lowest unemployment and 561 the highest wages? Is he not aware that his theory was rejected back in the 1930s by Professor Keynes? Will he produce evidence of factories where high wages have led to unemployment?
§ Mr. Carr
The evidence is in a macro-economic sense. This view is held, among others, by the hon. Gentleman's right hon. Friend the Leader of the Opposition, who stated it, as I have reminded the House before, when he was Prime Minister. Whereas reasonable monetary increases matched by efficiency are a good spur both to demand and to real standards of living, when monetary increases proceed at a rate which cannot be absorbed, they must lead to higher prices and/or lower profits. This must reduce demand and investment and, therefore, reduce employment.