Wages Councils

HC Deb 27 January 1981 vol 997 cc755-6

1. Mr. Allan Stewart

asked the Secretary of State for Employment whether he will make a statement on the effect of the operation of wages councils on employment.

The Under-Secretary of State for Employment (Mr. David Waddington)

Wages councils set minimum rates of pay in trades and industries where there is no other adequate machinery for the determination of pay. The rates are determined by representatives of both sides of the industry, who clearly need to take into account the consequences of their decisions for jobs. It is, of course, essential that wage rates, whether fixed by wages councils or otherwise, should be realistic.

Mr. Stewart

I am grateful to my hon. and learned Friend for that answer. Does he agree that communications, labour mobility and collective bargaining have changed radically since the wages council system was started in the 1920s? Will the Government give a detailed response to the recent well-researched document from the National Federation of Self Employed, whose conclusions, which have been confirmed by a number of my constituents, are that the main result of wages councils as presently constituted is to deprive groups such as school leavers and ethnic minorities of much-needed employment opportunities?

Mr. Waddington

The wages councils still cover almost 3 million workers in sectors of industry where there does not appear to be effective collective bargaining machinery. At the same time, I agree with my hon. Friend that we must watch the position carefully. If there is evidence that wages councils are making awards that have the effect of reducing jobs, the Government will consider that a serious matter. I read with great interest the document produced by the National Federation of Self Employed. My noble Friend intends to meet representatives of that organisation in the near future, and will listen to what they say.

Mr. George

Does the Minister agree that the scale of underpayment, either deliberate or accidental, is astronomical, with 70 per cent. following a complaint inspection? Does he agree also that we must reform wages councils—not abolish them—increase the number of inspectors, institute blitzes again, and simplify the whole range of orders, so that both employers and employees can understand what minimum rates are?

Mr. Waddington

I understand that the recent reduction in the number of inspectors will bring the number down to the level at which it stood in 1978. There is no clear evidence that blitzes have the effect of increasing job opportunities for people, and that is the important thing.

Mr. Peter Lloyd

Does my hon. Friend accept that the wages councils have specifically narrowed the differentials between juveniles and adults, and in that way diminished the job opportunities for school leavers and young people?

Mr. Waddington

I agree with my hon. Friend that over the years wages council awards have narrowed the differentials between the rates paid to young people and those paid to adults, but I must point out that that has been the effect of wage bargaining throughout the whole of industry. That in itself may not have done other than reduce work opportunities for young people.

Mr. John Grant

I welcome the hon. and learned Gentleman to the Front Bench and hope that he lasts rather longer than his predecessor, who was so spitefully sacked from under the right hon. Gentleman.

May I ask the right hon. and learned Gentleman why, on 16 December, I received a parliamentary answer from his Department saying that cuts in the Wages Inspectorate would be phased in over three years, whereas the unions have now been told that they will be completed by April 1982? More importantly, does he recognise that by cutting the Wages Inspectorate by one-third, by reducing the inspection cycle to once every decade, and by other changes that are being made, he is making a mockery of attempts to deal with rogue employers who are underpaying and breaking the law? How does the party of law and order square that one?

Mr. Waddington

I am grateful to the hon. Member for his welcome to me, but I am sorry that he coupled it with the rather snide remark that he made about my hon. Friend, who performed great services when he was holding the office that I now hold.

I must repeat what I said a short time ago. The recent reduction in the number of inspectors will merely bring the number down to the 1978 figure. That does not seem to me to be a dramatic reduction.