LOW-PAID WORKERS

HC Deb 11 March 1977 vol 927 cc1858-72

3.25 p.m.

Mr. Bruce George (Walsall, South)

I beg to move, That this House draws the attention of the Government to the position of the 4,500,000 low-paid men and women in the country, and in particular to the three million employees in the Wages Council sector; urges the Government to consider the effects of taxation policy; and, whilst recognising the benefits of the social contract for this group, further urges the Government to do all in its power further to improve the strategy necessary to fulfil its commitment to improving the relative position of the low paid as part of the social contract and continue to heed the needs of the low-paid worker when considering the next stage of the wages negotiations. This has indeed been a fortunate week for me. I succeeded in securing a debate on the Adjournment, albeit at 5.15 a.m. Secondly, I secured second place in the Ballot for Private Members' Motions, although it will be a truncated debate. Perhaps, in view of this indication of my luck, I should start doing the pools.

This debate is another strand of the first debate. We are still talking about deprivation—not educational deprivation, but income deprivation. One is related to the other, regrettably.

In the past few weeks, there has been a series of campaigns at different levels, and by different groups in industry, growing in intensity, to obtain a more favourable response from the Government in the next round of pay negotiations. We have heard from management. We have heard from skilled workers to this effect and seen direct action by some of them. These campaigns, if they can be called such, have been characterised more by emotion than by objectivity and fact.

I should state at the outset that in my view good management should be paid more than skilled workers, and skilled workers, should be paid more than unskilled workers. However, I believe that the bands from top to bottom should not necessarily be as wide as many people, including hon. Members on the other side of the House, would have us believe.

I do not believe that any large group of workers has destroyed what might be described as the natural order of things. I do not support the view that the income of a group of, let us say, the unskilled has displaced the skilled en masse or, as management might say, that the unskilled worker is almost displacing management en bloc in the movement of his income. I think that the subject requires more sophistication and less generalisation.

The rich are for ever bleating about the erosion of differentials for them. However, it is an inescapable fact, according to the Inland Revenue Association, that the top 1 per cent. own 30 per cent. of the total personal wealth in Britain. I shall not lose too much sleep about any narrowing or differentials for them. My main fear is that the differentials have not been narrowed at a sufficiently speedy pace to satisfy many of my colleagues and myself. Indeed, I joined the Labour Party to help to remove the differentials between this affluent group and the rest of us.

Undoubtedly, management has suffered along with the rest of the population in the last couple of years. In the report "A Survey of the Motivation of British Management", which was introduced a few weeks ago to a fanfare of great publicity by the Opinion Research Centre, we are told that management is now less motivated than it was in the past. If it is true that management earning, let us say, from £7,000 to £10,000 a year is now less motivated than it was, it can surely be argued that the many people who are earning £30 a week or less would be justified in expressing a smaller degree of motivation to their jobs. The lack of motivation on the part of people earning £30 a week or less can be of similar detrimental value to the economy as a whole as to the supposed lowering of morale on the part of management. The £100,000 spent on this survey could have been better spent, perhaps by investing it in industry. I hope that a similar amount of money can be found for a survey into the attitudes of low-paid workers to the events of the past couple of years.

Management must accept at least some of the blame for the ills affecting the country as a whole. Perhaps if we were better politicians or had better civil servants we would have a significantly improved rate of economic growth, but I do not think that management can opt out of its share of blame and say that the blame lies elsewhere. It is important that we should have good quality management, but management must accept a portion of the blame for their own plight and the plight of the country. The best managers must be well rewarded.

According to the ORC survey, it is regretted that some managers have found their incomes squeezed so much that they can no longer afford to send the kids to fee-paying schools, some cannot keep the domestic servants that they used to have, some have to do the gardens themselves, some find themselves unable to buy a bigger or better house or buy a second car or they cannot purchase a boat or holiday home.

To some people this may be regrettable, but I do not think the reality of the situation is quite as damaging as ORC say in their propaganda. As many as 40 per cent. of those interviewed said that they have had to make no economies in the past couple of years and 63 per cent. expected their standard of living in the next couple of years to be about the same or a great deal higher than at present.

I do not think that these statistics, produced amidst a blaze of publicity, necessarily support the case that they are attempting to put forward. We must accept that as a nation we shall never increase our standard of living, and we shall for ever claim to be underpaid—virtually everyone claims to be underpaid vis-à-vis our counterparts in America and Europe—until we produce goods as efficiently as those countries. Until then we shall always have this international differential.

Many managers are feeling the pinch, but I do not think that the ORC Report gets to the heart of the matter. The Inland Revenue Staff Association has said that Most directors might enjoy a higher standard of living than was revealed in the income tax statistics. According to the Association of Her Majesty's Inspectors of Taxes, Income from self-employment has been evaded more than in the past, and because of tax avoidance on fringe benefits the number of employees earning over £10,000 a year looked smaller than might be expected. So the crisis affecting management is not in every case as severe as we are led to believe, though I do not wish to obscure the fact that we are all suffering to some extent. The ORC Report says that management believes that other groups of workers were noticeably better off than they were. That is a subjective view, and this report is strong on subjectivity but not too strong on objective facts on how the position has really been affected in the past couple of years.

Of the managers interviewed, 19 per cent. said that they felt that unskilled manual workers were doing noticeably better than they were, 21 per cent, felt that skilled manual workers were doing better than they were, 15 per cent. thought that civil servants were doing better than they were and 10 per cent. felt that public employees were doing better than they were.

I hope to show that it is an absolutely fallacious view to see a group moving en bloc to replace other groups. The categories of civil servants and public employees referred to, ironically include many of the lowest-paid workers in the country. It is absolutely wrong to assume that the unskilled working man is doing noticeably better than management in this country today, not even in terms of percentage increases as an as yet unpublished Low Pay Unit Report clearly shows.

I want to talk about the forgotten army in our society, that large group of people who are low-paid. Few people realise the magnitude of this group. There are so many definitions of low-paid as to doubt how many fall into the category of low-paid. I shall take the base line used by the Low Pay Unit of £45 a week. The unit arrived at this figure by updating the TUC's poverty level of 1975 and took the £45 to be what a married man with two children living in a council house needs to earn to receive the equivalent of what he would get on supplementary benefit. Many people fall into this category—far more than most people realise.

These are people who earn their poverty. They work hard and take home very little at the end of the working week. We can look at examples on an industry-by-industry basis. The New Earnings Survey reveals some amazing statistics. The lowest paid includes one category of people in the professional and scientific service, and also one group in public administration. We are all aware of the appalling record of the hotel and catering industry when it comes to low pay, and I raised this in a previous Adjournment debate. But we have also to consider the textile and clothing industry, the service industries and agriculture. These are the industries persistently paying incredibly low wages to their work forces.

It is interesting to consult the New Earnings Survey to look at the occupations of large numbers of the low-paid. In April 1976, according to the New Earnings Survey, the percentages of full-time workers with weekly earnings less than £45 per week included 40 per cent. of males over 21 working in agriculture, 6 per cent. of those working in mechanical engineering, 11.5 per cent. of those in instrument engineering, 10 per cent. of those in metal goods, 30 per cent. of those in clothing and footwear, 11 per cent. of those in timber, 33 per cent. of those in the distributive trades and 39 per cent. of those coming under the ubiquitous heading of "miscellaneous services".

This is an appalling indictment of the way in which we organise our economy with such a large proportion of the population over 21 years of age earning these poverty wages.

Looking at the numbers involved, we see that, including overtime, 3.8 million people are earning less than £45 a week. If we exclude overtime, the figure is 4.5 million people. Adding the number of people on benefit in August 1976, we find that more than 3,126,000 individuals were in receipt of supplementary benefit in one form or another and, according to Social Security Statistics 1975, the estimated number of people in families who are eligible for one form or another of supplementary benefit is 8 million. The take-up rate is only 75 per cent. of this, so it may be that nearly 6 million people are in families dependent upon supplementary benefit. They will obviously include retirement pensioners, the unemployed and one-parent families. But the figure shows how many people are either earning their poverty or in poverty because they depend upon State benefits. Although we recognise that State benefits are going up, few people would claim that they permit a level of affluence or a high standard of living.

Looking at groups of people who are underpaid we see, as might be expected, that the majority are women. Despite the advances made by equal opportunities legislation, equal pay legislation and sex discrimination legislation, the problem of low pay amongst women is especially acute.

I refer again to the New Earnings Survey for April 1976. I look at occupations where 70 per cent. or more of the female work force are low paid. They include 93.4 per cent. of retail shop cashiers, 99.1 per cent. of retail shop check-out operators, 88.9 per cent. of receptionists, 72 per cent. of shorthand typists and 93 per cent. of ladies hairdressers, to name just a few. Despite all the advances made by women over the past couple of years, these are matters which we must look upon with considerable concern.

Then we have other groups, mainly immigrants, who have been shown traditionally to be enjoying, if that is the right word, the lowest pay and to be working in the less desirable circumstances.

There are some areas which we know from statistics are particularly badly off when it comes to wages. But, even within areas supposedly prosperous such as the West Midlands, there are considerable pockets of low pay, not the least being my own constituency. All the indices for low pay are there—a large number of women workers, wages council industries, immigrants, declining industries, small industries and industries lacking trade unions. One tends to find that industries lacking trade unions are amongst the lowest paid.

Industries covered by the 43 wages councils cause great concern and this embraces over 3 million people. In Hansard on 18th January 1977 we learned that, for example, taking the wages councils at random, in dressmaking the basic wage was £22.90 and that after stages 1 and 2 of the pay policy it was under £30. In most of the 43 wages council industries the basic rate appears to be about £30 a week. The licensed residential is £30 and retail drapery pays £31.60, to quote only a few. More must be done to prosecute employers who are found to be paying wages that are too low.

The low-paid have a strong moral claim on the rest of us to ensure that they are properly looked after in the next round of pay negotiations. They have not resorted to industrial action and they are not expressing their case as vociferously as other groups. We should pay more attention to their needs.

I hope that in the next few weeks the Minister will publish the statistics about how the relationship between the skilled, unskilled and management has been moving over the last few years. Those statistics could eliminate much of the prejudice in newspapers and other places. We must do what Jack Jones said and "put an axe at the root of the low pay problem".

The Government have done much to bear in mind the needs of the low paid in their incomes policies and in legislation. I shall be interested to see what Schedule 11 of the Employment Protection Act will do. I hope that in the next few weeks the interests of this large number of people will not be trampled into the ground by those who put their case in a more sophisticated and noisy manner. We are looking to the Government for further action.

3.42 p.m.

Mr. Peter Bottomley (Woolwich, West)

I welcome the motion because it gives us an opportunity to examine the argument of the hon. Member for Walsall, South (Mr. George) in favour of those employed in wages council industries. He said that the debate was linked to the previous debate on educational deprivation. It is also linked to the debate on personal savings.

If we are to move people out of low-paid jobs, we shall have to ensure that jobs will stand a higher rate of pay. That means that the rest of us will have to pay for it. Any expansion in industry will come from extra savings. If people were paid more and saved more, there would be a more equal spread of wealth in the country. If we could persuade more Labour-controlled councils to let council house tenants buy their own homes. that, too, would create a more equal society.

There are fewer low-paid workers today, largely because there are an extra 700,000 people out of work and because the unemployed tend to come from the bottom of the labour market.

When my wife was researching for the Child Poverty Action Group, she was paid poverty wages of £10 a week. She discovered that many of the workers who lost their jobs were those who were not represented by trade unions. However, that was not the only cause, because many of them were previously employed by small companies that would have gone out of business if wages had suddenly risen.

We can ask the Government to go further in simplifying many of the orders for wages council industries. I understand that the Government are doing something on those lines. There is no point in legislating to provide minimum pay in certain industries if the people in those industries cannot understand what the minimum pay is. We accept that there are many who do understand but who do not meet their obligations. We expect people to obey the law whether they are Clay Cross councillors or employers in wages council industries.

One of the difficulties is that 10 million workers, including the police, are not represented by TUC-affiliated unions and are not being consulted by the Government about the next round of the pay policy. The Government must sort out negotiating and consultation procedures so that as many employees as possible are represented in the settlement of the norm from June onwards.

One can go a stage further. A lavender-coloured report of the Labour Party conference at Blackpool dropped through my door this morning. On page 137, there is a motion that was carried by conference to increase the recognition of differentials, increase the relative position of the low-paid and a couple of other things which, together, add up to more than 100 per cent. of what is available. I hope that the Government take this opportunity to spell out their attitude on the position of the low-paid who are not represented by the big guns on the TUC Economic Committee.

In the past few years, the level of pay settlements, which have been associated with the rate of inflation, have often been set by a hard core of highly skilled workers, normally aged between 25 and 40, working in industries where the consumer has paid for the pay increases in price rises when there has been no increase in productivity. On other occa- sions, the lead in pay settlements has been given by workers in what have been, up to now, relatively secure jobs, such as those in nationalised industries, the Civil Service and associated professions. The people who lost out were those who could not get the going rate. We saw this for a time with nurses and, before the Houghton Report, teachers and also with people outside the major engineering and technological industries. They have had to settle for £2 instead of £4 or £4 instead of £12. We shall be interested to hear how the Government intend to reconcile protecting the interests of the low-paid with allowing respect for differentials to be re-established.

On international comparisons, we could do a great deal for the low-paid by increasing family allowances, child benefits or child tax credits. This would take pressure off people who are likely to remain in relatively low-paid jobs for the foreseeable future. There is no reason for their children to suffer because of that.

3.47 p.m.

The Under-Secretary of State for Employment (Mr. John Grant)

I shall try to cover a lot of ground in the limited time available to me. I have a sense of having been here before and not so long ago. My hon. Friend the Member for Walsall, South (Mr. George) had an Adjournment debate in January about contract cleaners and low pay. This motion is wider ranging and is further evidence of his keen interest, which we share, in the problems of the low paid.

I listened with great interest to the points raised in the debate and I acknowledge the recognition paid in the motion to the benefits of the social contract for the low-paid. I use the term social contract in its widest sense and am not referring simply to the voluntary pay policy, important though that has been for the low-paid.

The significance of the social contract is that it is an understanding between the Government and the trade union movement covering a wide range of economic and social policies, many aspects of which have important implications for the low-paid.

One of the central aims of the social contract has been and continues to be to secure a reduction in the rate of price inflation to a level comparable with that of our major industrial competitors. As has been said before this is necessary in order to improve our overseas competitiveness. Allied with the Government's industrial strategy, it will provide the basis of increased employment, the regeneration of our industry and the growth of future prosperity. A reduction in the rate of inflation will in itself help low-paid workers. One of the salient features of rapid inflation is that it is capricious. It involves an unplanned redistribution of income—almost inevitably away from those who are themselves the least welloff—and unless steps are taken to counter this happening the least well-paid may experience the steepest fall in their relative standard of living.

My first point then, is that the attack on inflation will, of itself, have a direct benefit for low-paid men and women. But secondly we must not forget that the voluntary pay policies which have been pursued since this Government took office three years ago have each included special provisions to help counter the capricious effects of inflation. I want to refer to these special measures a little later.

I want to say something about the numbers of low paid men and women. The motion mentions a figure of 4.5 million. I do not want to become involved in statistics but I would call in support the New Earnings Survey for April 1976 which my Department published and to which my hon. Friend referred. That figure corresponds to the total number of full-time adult workers whose earnings were less than £45 a week, excluding overtime earnings. The survey defines these adults as men aged 21 and over and women aged 18 and over whose pay was not affected by absence. It is made up of 1.7 million men and 2.8 million women and was equal to 17 per cent. of all men and 59 per cent. of all women in employment at that time. If overall earnings are taken into account, I believe the figure falls to 11 per cent. of all men and 58 per cent. of all women It is clear that a large majority—almost two-thirds—of those earning less than £45 a week are women.

It is also noteworthy that of those earning less than £45 a week, half the men, and one quarter of the women, earned between £40 and £45. I welcome the recognition in the motion of the benefits of the social contract for low-paid workers. Special provision for the low-paid has been a central feature of the social contract from its beginning and the form of the TUC guidelines endorsed by the Government are well known. The current pay policy, and the preceding £6 policy, both afforded favourable treatment to the low-paid. As a result the low-paid have maintained their relative position. This has enabled an improvement, albeit a small one, to take place.

It is all too easily forgotten that the social contract extends well beyond the limited sphere of pay policy, important though that is. Those who claim that this has been a one-sided bargain in which the Government have not done their share have conveniently short memories and, in some cases, rather long resolutions. Other measures that the Government have pursued will have assisted the low-paid either by helping to improve collective bargaining arrangements and other institutional machinery for settling pay or by adding to their income by improved allowances.

The Employment Protection Act is a case in point. Our view is that one of the main ways of tackling low pay is by means of an extension of effective arrangements for collective bargaining. This is one of the objectives of the Act. Schedule 11 of the Act, which came into force on 1st January, extends to all workers protection against any undercutting of wage rates very similar to that given to workers on Government con tracts by the Fair Wages Resolution. It will give trade unions added scope to wipe out pockets of low pay.

As I have already indicated, women constitute a majority of the low-paid and the Government believe that continued progress towards the principle of equal pay has justified the exception of increases necessary to comply with Equal Pay legislation from the pay limits. There is evidence that the Equal Pay Act has done something to raise women's earnings relative to men's.

The motion seeks to draw our attention to the position of the 3 million men and women whose pay and conditions are regulated by wages councils. There can be no doubt that pay and conditions in these industries have traditionally lagged behind. Indeed, the continued existence of wages councils is an acknowledgement that collective bargaining does not operate effectively in such industries. The Government have, however, taken steps to improve the functioning of wages councils. For example, the Employment Protection Act will help to speed up their procedures while one of the new measures introduced is the saturation inspections—the so-called "low pay blitzes"—of selected towns.

I am sorry that the hon. Member for Woolwich, West (Mr. Bottomley) referred to a witch hunt. If the hon. Gentleman consulted his right hon. Friend he will not find that view shared. The Government have followed a policy of trying to protect the low-paid through statutory rates in those industries.

Mr. Bottomley

I apologise to the Minister if I sounded critical. All I am trying to say is that one does not need to spend all one's time chasing after people.

Mr. Grant

I am grateful to the hon. Gentleman not only for making his position clear but for his support. We intend follow up visits—I cannot promise a specific visit to his constituency—arranged at random, of firms which have been discovered to be underpaying, and further blitzes will take place.

There is a need for more effective enforcement. Indeed, I have invited the TUC, the CBI, the retail consortium and the chairmen of wages councils to see me within the next month about the question of enforcement. That is an unprecedented initiative.

Minimum rates are a matter for wages councils, not the Government. The councils have made efforts in recent years to improve them. Increases in statutory minimum rates in some of the more extensive wages councils ranged from 50 per cent. to 70 per cent. for men and 60 per cent. to 100 per cent. for women over the period 1974 to 1976. It is notable that 34 out of the 39 wages councils have settled under the £6 pay policy at the full amount allowable. Of the remainder, most have settled near to the limit.

The hon. Gentleman mentioned simplification of orders. I am in sympathy with what he said. I am taking action to achieve something on this front. I par- ticularly want to get away from some of the legal jargon. I believe that laws are made for ordinary people, not lawyers, to interpret. We are doing our best to do something about it. There are a number of steps, but I do not have time to outline now what we are hoping to do.

My hon. Friend referred particularly to the effects of taxation policy on the low-paid. This subject was fully discussed in the debate on the motion for the Adjournment on 3rd March when the Government's view was comprehensively set out by my right hon. Friend the Chief Secretary to and my hon. Friend the Minister of State at the Treasury. I hope that my hon. Friend will agree that they made it quite clear that the Government fully recognise the point which concerns him—high effective marginal rates of taxation on low earnings.

My hon. Friend's motion urges the Government to continue to heed the needs of the low-paid worker when considering the next stage of the wages negotiations. At last September's Trades Union Congress there was overwhelming support for a motion concerning the social contract and collective bargaining which emphasised the need to avoid a wages free-for-all at the end of the present pay round. Significantly, that motion pointed out that a pay explosion would injure the weaker members of the community, among whom must be included low-paid men and women.

That brings me back to the point that I made at the beginning—that one of the main ways of helping the low-paid is by conquering inflation, bringing down the rate of price inflation and avoiding another burst of wage inflation.

Mr. Peter Viggers (Gosport)

As the hon. Gentleman has been so critical of inflation, would he have supported the motion in my name had it not been talked out by the Government?

Mr. Grant

I shall look at that motion in a few minutes. I shall have to tell the hon. Gentleman afterwards.

As for the period after July, the Government have made clear their overriding aim of continuing the attack on inflation and the part that a further agreement on pay has to play in ensuring its success. I shall not speculate on the form of any future pay arrangements, except to say that there must be some flexibility. The Prime Minister has made that point unequivocally. I do not think that anybody in his right mind would query that.

However, the TUC has called for a planned return to free collective bargaining to begin to take place this year. The TUC's economic review sets out some of the major questions which must be considered—for example, whether emphasis should be laid more on adequate differentials to reward ability, effort, skill and responsibility or on improving the relative position of the low-paid. We have to take account of priorities. There is a good deal still to be worked out. My hon. Friend has made clear some of the priorities that he would set for the discussions about pay arrangements in the next round. I assure him that the position of the low-paid worker will be fully taken into account.

There are those who call for an orderly return to free collective bargaining and there are many on the Benches opposite, Front and Back, and some on our own Benches, who call for an unqualified return to free collective bargaining. So did the so-called Conservative trade union conference and so do some of our trade union friends. They are really asking us to choose between an orderly return and a rush to chaos. That is what it comes down to. What else can it mean? It means going back to the jungle where industrial muscle is all that counts. That is not the way forward for the low-paid. I am a Socialist, and I say loud and clear that that is not the way forward for Socialists or for a Labour Government and their traditional trade union allies with whom I think that we sink or swim. I believe that we must and that we shall carry on a constructive partnership. I believe that we shall swim together, and that is why I welcome my hon. Friend's motion. I think that he has done an exceedingly valuable job in calling attention to this real problem and in helping to ensure that in this delicate situation—

It being four o'clock, the debate stood adjourned