HC Deb 21 January 1986 vol 90 cc172-3
7. Mr. Maples

asked the Paymaster General what has been the underlying increase in average earnings over the last year.

Mr. Alan Clark

The underlying increase in average weekly earnings in the year to November 1985 was 7.5 per cent. This should not be confused with the average increase of pay settlements, which will be lower as the figure for earnings includes overtime, bonuses and similar factors.

Mr. Maples

Does my hon. Friend agree that, in present circumstances, both figures are too high, and that although averages can conceal a great deal, it is vital that individual businesses do not grant pay awards which increase their real unit costs? In that respect, should we not learn the lesson of the United States, where recently millions of new jobs have been created when real average earnings have fallen?

Mr. Clark

I appreciate the expert knowledge which my hon. Friend, as the author of a booklet on the subject, brings to the matter, but it is inappropriate for a Minister to say that any wage increase is too high, as an abstract concept. It is not for the Government to intervene in bargaining between employers and employees. None the less, my hon. Friend is perfectly right to draw attention to unit costs and productivity, on which our competitiveness rests.

Mr. Skinner

Is the Minister aware that one reason why the increase was about 7.7 per cent. was that the Government gave the green light to those at the top end of the salary scale last year when they awarded a 19 per cent. increase to those earning top salaries? As a result, executives and other types managed to rope in another 17 per cent. during 1985. Is it any wonder that the average has increased to more than 7 per cent.? The trouble is that those at the bottom end have been hammered by the Government since 1979.

Mr. Clark

The Top Salaries Review body is completely independent, and the House would take a poor view of any Government interference in its deliberations. The hon. Gentleman's arithmetic is rather confused. The recipients of those awards were so few in number that they could not possibly affect the statistical average of the increase in earnings.

Mr. Baldry

Since pay in British manufacturing industry is increasing twice as fast as that in Japan and the United States, it can only mean that our manufactured goods will become consistently less competitive, which means that fewer are made, fewer are sold and there are fewer jobs. How do we stop this national lunacy of pricing ourselves out of work?

Mr. Clark

There is much truth in what my hon. Friend says, but I would not wish to be associated with any dirigiste intervention in the bargaining between employers and employees. Employers must see the sense of my hon. Friend's argument reflected in their order books.