HC Deb 17 July 1986 vol 101 cc1160-1
6. Mr. Forth

asked the Chancellor of the Exchequer what progress he is making with his discussions about profit-related pay schemes.

The Chancellor of the Exchequer (Mr. Nigel Lawson)

A Green Paper on profit-related pay was published on Tuesday and has been widely welcomed.

Mr. Forth

I thank my right hon. Friend for that reply. Will he confirm that profit-related pay forms a substantial element of remuneration in Japan? Does he not regard that as a most encouraging precedent for his scheme and this country? Is he, therefore, able to proceed with speed and confidence towards the fulfilment of a similar position in this country?

Mr. Lawson

My hon. Friend makes an important point. It is customary in Japanese industry for the average Japanese employee to have a sizeable part of his total remuneration in performance bonuses, which are linked to the profitability of the company. I have little doubt that that has a positive effect on industrial relations in Japan, on the identification of employees with their companies, and on the low unemployment rate that Japan enjoys.

Mr. Skinner

How will a nurse working in the National Health Service benefit from one of these schemes?

Mr. Lawson

A nurse working in the NHS will benefit from the better performance of the national economy, and that is what the scheme is about.

Mr. Penhaligon

Is the Chancellor's main attraction to this scheme the idea of getting people involved in the profitability of their company, with which I would certainly concur, or is it the possibility that it might keep down pay claims?

Mr. Lawson

There are two objectives. One is certainly to improve identification and motivation among employees, and I am glad that the hon. Gentleman, on behalf of the Liberal party, supports that. Secondly, the scheme has a beneficial effect on pay flexibility. One of the difficulties in the United Kingdom is the excessive rigidity of our pay bargaining system. The introduction of greater flexibility in this way will be beneficial, not least to those who are at present out of work.