HC Deb 30 July 1975 vol 896 cc1974-84

12.9 a.m.

Mr. Bruce George (Walsall, South)

It is a great pleasure to be embarking on this adjournment debate at this relatively civilised hour, and not at breakfast time, as was originally feared. I wish to raise the question of low pay in the hotel and catering industry. I first raised the issue some months ago, as I believed that workers in the industry are among the lowest paid in the country.

The debate seeks to deal with a large body of men and women who work hard, long hours but earn poverty wages. However one defines "low pay"—whether by the old method of the National Board for Prices and Incomes by regarding workers as among the bottom 10 per cent. of wage earners, or whether by regarding the "low paid" as those who receive two-thirds of the national average wage or, say, £30 a week, which is the norm accepted by the Government and the TUC—it can truly be said that without doubt workers in the hotel and catering industry fare very badly indeed.

This view has been confirmed by two recently published reports. The first by Brown and Winyard, was published by the Low Pay Unit and entitled "Low Pay in Hotels and Catering". The second is a report published by the Hotels and Catering EDC and is entitled "Manpower Policy in the Hotels and Restaurant Industry". Both are damning reports and point to the seriousness in the hotel and catering industry of the low wages which are at present being paid. There were earlier reports brought out by the Commission on Industrial Relations between 1971 and 1973 to which I shall refer.

We are dealing with an industry which is vital to our economy. We are not talking about the odd Wimpy bar or hotel scattered around the country. The EDC puts the matter in this way in a foreword: The hotels and catering industry is a major sector of the economy, employing 7 per cent. of the total British labour force. It makes a big contribution to the balance of payments and to the welfare of the country…". We all want to see a healthy and prosperous industry, but we also demand fair play for those who are vital to this industry—namely, the industry's work force. Fair play is certainly not what that work force has attained. At present official estimates show that some 1,300.000 workers are employed in the industry, but the industry is under-unionised. The result of the low unionisation is an absence of collective bargaining.

To compensate for the situation a system of wages machinery has been established. There are four major wages councils—the Licensed Residential Establishment and Licensed Restaurant Wages Council; the Unlicensed Place of Refreshment Wages Council; the Licensed Non-Residential Establishment Wages Council; and the Industrial Staff Canteen Wages Council.

The wage rates laid down by the councils are exceedingly complicated and should be simplified. The Low Pay Unit attempted to work out what a man was entitled to and gave up in failure. The rates are complicated. But two factors are incontrovertible. The first is that wages council rates are deplorably low for the industry. Secondly, even though these levels are low, many establishments in this country do not pay even those minimum wage levels. Many establishments are committing illegal acts by paying below the minimum rate laid down by the wages councils.

The rates of pay in the hotel and catering industry vary from job to no job, from region to region and from employer to employer. There are many excellent employers who pay way above the wage council rates. But there are barmen, bar staff and other hotel workers who earn £20 a week—and many who earn even less. When I stated the issue publicly six months or so ago and mentioned the minimum wage for barmaids of 35p per hour, I received scores of letters from bar staff saying "It is nice to know what the minimum is, because we are working in large chains of hotels and breweries and receiving less than the minimum".

These bar staff and hotel staff work long and, by definition, unsocial hours, with split shifts, and the work can be heavy. For example, cellarmen. Staff can very easily be dismissed by their employers and are often abused by customers, particularly as the evening wears on, in hotels and pubs. They are at the beck and call of the public, and in many cases they may even be molested. For this hard work they are badly rewarded. It is not being over-dramatic to say that in many cases workers in the hotel and catering industry are one short step removed from slave labour. They should be paid a living wage. At present they are not getting this.

About half of the men and over 90 per cent. of the women employed in this industry are earning way below £30, and I and many hon. Members deplore this.

The report of the Economic Development Corporation says on page 4: In April, 1973, therefore, the average manual male worker in hotels and catering would have been in the lowest 13 per cent. of all manual men as regards average weekly earnings. The corporation produced a figure for women which was just about as disastrous. The EDC report also mentions that the absolute gap between the earnings of those employed in hotels and catering and those in all other industries actually widened between 1973 and 1974.

The Government have recognised that the picture is desperately unsatisfactory, and that even more attention must be paid to it.

What can be done? There is a lot of merit in the idea of a statutory minimum wage, and workers in the industry would benefit accordingly. One could also suggest that wages councils themselves, in their periodic reviews of salaries in this industry, could raise the levels considerably.

There are those in the industry who say that it cannot afford any substantial raising of salaries, but, as Jack Jones said not long ago, if the industry is not capable of paying a living wage, there are many hotels and institutions within this industry that ought not to be allowed to continue. If an industry cannot pay a living wage it should go to the wall.

Wages council rates could be raised. This would meet, no doubt, a lot of opposition from those representatives on the wages councils who are from the hotel and catering industry. These rates should be raised and the new rates should be rigidly enforced.

I pay tribute to the inspectors who go round checking on the rates paid but I believe they should be increasingly vigilant and that the regulations should be more rigidly enforced. They should bring to book far more swiftly the recalcitrant employers who are disobeying the wages council rates.

Every support should be given to trade unions which are attempting to organise workers in the industry. There are some unions which have had limited success so far—the General and Municipal, the Transport and General and USDAW—but they are facing seemingly insuperable barriers in getting this industry properly unionised. There is an incredibly high rate of staff turnover. The EDC report has said that if the turnover rate is 80 per cent. per year, as it could be, the loss to the industry could be of the order of £22 million a year. Someone has costed the loss to an employer of a worker at about £100 per recruit, so this figure is very high.

Why is the turnover rate so high in the hotel and catering industry? A major factor must be the low rates of pay that this work force receives. Other factors are the difficulties of trade unions in getting a work force to be unionised. There is a high incidence of casual workers and of women, who are needlessly slow and lax in joining a trade union. Also, especially in the London area, there is a high incidence of foreign workers. They come from lands where trade unions, to put it politely, are not particularly strong. Another factor leading to difficulty in unionisation is the smallness of establishments and the fact that they are incredibly dispersed. Lastly, employers in small enterprises increasingly can appeal to the loyalty of their employees in not pressing for higher wage rates and joining unions.

In this industry, the trade unions are fighting battles which were won in other industries 100 years ago. I hope that they will be more successful, because if people join trade unions and press for higher wages, they will receive a living wage and render the concept of wages councils superfluous.

A fourth thing which could be done to improve the lot of these 1.3 million workers is that there should be more rigid enforcement by inspectors. I note that a CIR report of some two years ago said that in one area which it investigated about 10 per cent of all enterprises visited paid less than the minimum rate laid down by the wages council. The NEDC report published in May said that in another area of a wages council the figure was as high as 36 per cent. In other words, 36 per cent of the enterprises in a specific area of responsibility of a wages council were not paying even the miserly rate laid down by the wages council. So rigid enforcement and stiff penalties are imperative.

I refer now to the myth of fringe benefits. It is claimed by many in the industry that there are ancillary benefits, and that the low wages are not a satisfactory guide to the standard of living enjoyed by its work force, because some employees have housing laid on and many have free meals. I do not accept this.

Then there is the issue of tipping. The more one investigates the problem of tipping in the industry, the more one realises that figures are not available to give a proper view of what percentage of a person's income can be attributed to tips. Evidence is scanty. I regard tipping as degrading. Even if there is a high level of tipping in an enterprise the tips received need to be pretty high to bridge the gap between the wages paid and the basic minimum wage which should be enjoyed. The Tavistock Institute and the EDC report of 1969 revealed that tipping had decreased efficiency and profitability and, indeed, had increased recruitment problems and caused embarrassment to customers.

In my view, tipping should be abolished. The service charge should also be abolished. I feel sure that people would be prepared to pay for the service provided in such a way as to do away with tipping and service charges. I have come across many instances where people have paid a service charge and tipped on top of it. I understand, too, that a tip is the property of the employer. It is not necessarily passed back to his work force.

I applaud the efforts which have been made by the Government to raise the wages of the lower paid. I applaud their efforts to raise the benefits to those who are not able to work—the elderly, the disabled and the unemployed. But I believe that it is our primary task, as members of the Labour Party, to eliminate poverty, and I ask my hon. Friend to use his powers to ensure that the wages paid in this vital industry are appropriate to the task performed by those engaged in it. The people do a difficult job in difficult hours. They are badly rewarded. This is a situation which I should like to see reversed.

12.24 a.m.

The Under-Secretary of State for Employment (Mr. Harold Walker)

I listened with great interest to all that my hon. Friend the Member for Walsall, South (Mr. George) said. I am grateful to him for raising this important subject, and I welcome much of what he said.

My hon. Friend began by making it clear that much of what he said depended heavily on the report of the Low Pay unit. Since section 1 of the Low Pay Unit's report relies heavily on statistics obtained from my Department, I can safely say that it does not present any new facts. But I cannot agree with the unit, as I will show, on some of the conclusions drawn in its report from these figures.

However, nobody will disagree that the hotel and catering industry is a low- pay area and that it has become almost a tradition that both basic rates and earnings are at or near the bottom of the league tables. In the greater part of the industry minimum rates are set by wages councils. The mention of wages councils immediately triggers off thoughts of low pay. But wages councils exist in the industry only because of a lack of organisation, and, of course, pay levels would probably be even lower in their absence. That wages councils are still needed to set at least a base for pay levels in this industry was accepted by the Commission on Industrial Relations, which investigated and reported on the industry a few years ago. The Commission recommended that the wages councils might be dispensed with only in the industrial and staff canteens sector. It did, of course, make recommendations in other reports, principally to the two sides of the industry, on improving their organisation. So for most of the hotel and catering industry we can expect the wages councils machinery to continue for some time to come. I can only attempt to show what we have done and hope to do to improve the situation.

First, on the CIR recommendations to abolish the Industrial and Staff Canteen Undertakings Wages Council, we have published a notice of our intention to abolish the council. Some objections have been received and these are now being investigated by a commission of inquiry appointed by the Secretary of State.

The performance of wages councils has, until recently, left much to be desired. But settlements over the last nine months or so have indicated a much livelier appreciation on their part of the plight of the low-paid workers within their scope, and significant progress has been made. All four wages councils in catering have now reached settlements in the current cycle, although not ail have yet been implemented. To take but one example, the Licensed Residential Establishment Council has made proposals raising the minimum for a barman from £18.18 to £27.75. No one can deny that for some low-paid workers this is a very significant step in the right direction.

My hon. Friend will know that the Employment Protection Bill, which we have been debating tonight, contains provisions designed not only to improve the wages councils system by bringing it more into line with procedures in joint industrial councils but to encourage organisation in this sector. Notwithstanding the difficulties to which my hon. Friend referred, the greatest benefits to be won by these workers will come through better organisation and eventual abolition of the statutory wage-fixing machinery. That is why we have included provisions in the Bill which will enable wages councils to fix terms and conditions of employment in addition to pay and holidays and speed up the procedures. In future, wages councils will be able to make their own orders without reference to the Secretary of State. That will enable wages councils to move to a half-way house of a statutory joint industrial council to encourage the move towards full voluntary machinery where this could be difficult in a single step.

Turning to the particular problems of the hotel and catering industry, it is not unnatural that this industry has attracted some attention from a number of directions over several years. It was a Labour Government who referred the question of improving industrial relations in hotels and catering to the CIR in 1969. The National Economic Development Office also published a report in May this year, entitled "Manpower Policy in the Hotels and Restaurants Industry", one chapter of which is devoted to terms and conditions of employment.

I turn now to the reports of both the Low Pay Unit and the NEDC. The former draws on the CIR reports and the new earnings survey results to a considerable extent. It also draws conclusions from interviews that the unit carried out over 56 workers—34 full-time and 22 "casuals". This seems a very small sample on which to base conclusions in such a very large industry. NEDC analysed some results from the new earnings survey and carried out a postal survey in order to obtain a more detailed breakdown for separate occupational groups. It states that the data from these two sources provide an acceptable picture of earnings and hours in the industry at June 1973. The same conclusion is reached that low pay is prevalent. Using "low pay" criteria of 60p per hour for men and 55p for women it estimates that 49 per cent. of manual men and 88 per cent. of women were low paid, compared with 11 per cent. and 53 per cent. respectively in all industries and services. The LPU used criteria of 75p and 50p for men and women respectively and concluded that 70 per cent. and 70 to 80 per cent. were low paid. The LPU points to long working hours, but the NEDC concluded that in the licensed residential and restaurant sector men worked two hours less than and women about the same hours as were worked by men and women in all industries. Neither survey, it says confirms the wide-spread impression that hours of work in hotels and catering are exceptionally long". It adds that the fact that the great majority of staff work shifts and over 60 per cent. work split shifts may explain why the industry has an image of working not only awkward shifts but also long hours". The NEDC clears another point—it was unable to show that there are significant differences between earnings of workers in large companies and other establishments. The absence of information on this in the CIR report incurred criticism from the LPU.

On the matter of infractions, the LPU's estimate that as many as 130,000 workers in hotels and catering were being paid less than the statutory minimum in 1974 is not supported by the figures available from the Wages Inspectorate. Because all complaints are investigated and routine inspections are biased towards those establishments more likely to be underpaying, the establishments visited are not a representative sample and the results cannot be "grossed up" to provide an industry-wide picture. This is not to say that we are satisfied about the present rate of infractions in the industry. My hon. Friend will know that the Employment Protection Bill seeks to improve the effectiveness of the Wages Inspectorate by enabling the Secretary of State to call for returns from selected employers, which will indicate where the areas of infraction lie and enable the inspectorate to concentrate on these areas and to effect an overall improvement in results.

The Low Pay Unit has made a number of policy recommendations, including the fixing by the Government of a statutory moving low-pay target for wages councils. I have already explained during the proceedings on the Employment Protection Bill that the Government firmly adhere to the view that voluntary collective bargaining is preferable to statutory control, and, as I have already said, the provisions in the Employment Protection Bill are designed, by giving wages councils greater freedom and making them more like joint industrial councils, to help towards abolition. The dilemma is, as I pointed out in Committee, that imposing new statutory requirements on wages councils may serve to hamper the development of collective bargaining arrangements. I believe that the most effective way forward is through better organisation on the two sides of industry, as was advocated by the CIR in its various reports.

In casting some doubt on the Low Pay Unit's findings and recommendations I am not suggesting that we are satisfied with or complacent about the present position. Far from it. Indeed, I hope I have said enough to indicate that we are determined to provide for the more effective operation of wages councils and more rapid progress towards collective bargaining arrangements not only in the hotel and catering industry but throughout the wages council sector. That is why we have included the provisions in the Employment Protection Bill to which I have referred.

Finally, the policies set out in the White Paper "The Attack on Inflation" are very relevant for the workers in the hotel and catering industries. These policies are designed to ensure that by the late summer of next year, the year-on-year increase in prices will be no more than 10 per cent. and by the end of next year it will be down to single figures. No groups suffer more from rapid inflation than the lowest-paid members of the community and no groups stand to benefit more from our attack on inflation than the low paid. The £6 pay limit which the TUC has agreed on will call for sacrifices from most to achieve the objectives that we have agreed with the TUC and CBI. But the pay limit takes the form of a flat rate because in this way the largest percentage increases will be focused on the lowest paid. Such an approach will be of particular benefit to the 3¼ million workers covered by wages councils.

We have also—in paragraph 8 of the White Paper—set out transitional arrangements to ensure that the introduction of the policy will not give rise to inequity as it applies to wages councils because of the length of time between the date at which councils agree their proposals and the date on which increases come into effect. We have provided that all wages council proposals decided on before the date of publication of the White Paper—11th July—will be implemented even if the date of implementation is on or after 1st August. As it happens, this provision will benefit many workers in the hotel and catering industries because the Licensed Residential Wages Council is one council where proposals for substantial increases were agreed before 11th July but have not yet become operative. They will be implemented in full.

To sum up, while we cannot agree to all the interpretations of the facts and the recommendations in the Low Pay Unit's report on the hotel and catering industry, we agree with it that the present operation of the wages council machinery in this and other sectors needs to be improved. We believe that the greatest possible encouragement of voluntary collective bargaining offers the best way of tackling the present deficiencies. We have included provisions in the Employment Protection Bill with this end in view. In addition, the policies set out in the White Paper "The Attack on Inflation" will be of particular benefit to workers in the hotel and catering industry and throughout the wages council sector both because these workers stand to gain most from the attack on inflation and because the pay limit takes the form of a flat rate rather than a percentage.

I am grateful to my hon. Friend for giving me this opportunity of setting out our general strategy in the wages council sector. I hope he will agree in the light of what I have said that the Government are as concerned as he is with this issue and have already introduced proposals to tackle the problems to which he has so graphically referred this evening.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes to One o'clock.