Unit Labour Costs (Hansard, 20 March 1984)

§ 9. Mr. Rathbone
asked the Secretary of State for Employment if he will provide the latest information on comparative unit labour costs in Great Britain and in the European Community as a whole.

§ Mr. Tom King
Information for the European Community as a whole is not available. The annual change in unit wage and salary costs in the third quarter of 1983 was up 2 per cent. in United Kingdom manufacturing, minus 3 per cent. in West German mining and manufacturing and plus 12 per cent. in French engineering.

§ Mr. Rathbone
Does my right hon. Friend agree that that is a most unhealthy base for the continued upturn in the economy projected by the Government, which we all want?

§ Mr. King
I hope that the House took careful note of those figures. We take some encouragement from the reduced rate of inflation, but should heed the warning that our unit costs are rising. Although the question deals specifically with Europe, it is worth noting that unit costs are falling in Germany and the United States, and are static 900 in Japan, which shows that we cannot afford to relax, and how important it is to ensure that we keep our prices competitive.

§ Mr. Litherland
What consolation is the Minister's answer to the work force of the Phillips Rubber Company in Manchester, which has been sacked and locked out merely because its crime was to ask for an increase on £46 a week for a 40-hour week?

§ Mr. Speaker
Order. The hon. Gentleman's supplementary question has nothing to do with question 9.

§ Mr. Yeo
Does not the significance of my hon. Friend's answer lie in the French figures, which show the cost of the disastrous Socialist policies pursued there? Does he accept that if we were to take account of the Opposition's suggestions and criticisms made after last week's Budget, Britain, too, might go down that route?

§ Mr. King
The idea that Socialist policies offer salvation to France was not reflected at the Council of Ministers meeting, when the French Minister had to face adverse publicity following the announcement that France would have to lose 500,000 jobs in steel, cars and shipbuilding because of its problems. I am surprised that hon. Members argue about this, because we shall not get export orders, or the jobs that go with them unless we stay competitive.

§ Mr. Maclennan
To what does the Secretary of State attribute the relative deterioration in our competitiveness under his Government, and what does he propose to do about it?

§ Mr. King
At present our increase in productivity is about 6 per cent., which is similar to that of Germany, but our wage increases in the past year have been substantially in excess of those in Germany, and greater than our increase in productivity.

§ Mr. John Smith
Given what the Chancellor said last night and what the Secretary of State has said today, would it not be fair to describe Government policy as consisting of the following proposition: that profits should be as high as possible and wages should be as low as possible?

§ Mr. King
I wonder how the right hon. and learned Gentleman, who is always calling for investment, thinks investment comes without profits. That is important to this country's recovery. It is no coincidence that we are now starting to see more jobs in this country—[HON. MEMBERS: "Where?"] I know that hon. Members get upset at good news, but if they care to study the Employment Gazette they will see that the latest figures show that more people are at work and that we are creating more jobs. It is no coincidence that that is happening at a time when the profit performance of industry is improving.