HC Deb 15 February 1994 vol 237 cc798-9
10. Mr. Congdon

To ask the Secretary of State for Employment what evidence he has on non-wage labour costs in (a) the United Kingdom, (b) France, (c) Germany and (d) Italy.

Mr. Michael Forsyth

Non-wage costs never get into the employees' wage packets, but do make it more expensive for employers to provide a job. On average, for every £100 of wages an employer in Britain must pay £20 extra, in Germany £30 and in France and Italy £40.

Mr. Congdon

Does my hon. Friend agree that those lower non-wage labour costs are part of the reason for our success in attracting inward investment? Does he also agree that the imposition of the social chapter—which both Opposition parties would like to force on this country—would not only destroy our competitive advantage, but, more important, destroy jobs?

Mr. Forsyth

I entirely agree. Lower non-wage costs are not only a reason for the attraction of inward investment to Britain but—along with our general economic policy—the reason for the fact that in real terms workers in Britain enjoy some of the best take-home pay packets in Europe.

Mr. Alex Carlile

Given the favourable non-wage labour costs to which the Minister has just referred, how does he justify the enormous discrepancy between the average wage in England and Wales and wages in areas such as south Wales and Northumberland, where average weekly earnings are up to £65 less than the overall average? Why are the Government not tackling such huge wage differentials?

Mr. Forsyth

I am amazed that the hon. and learned Gentleman should ask that question. If he had his way and we signed up to the social chapter, the extra costs would have to be met out of those pay packets, and there would be even less for people to take in wages. The hon. and learned Gentleman should not complain about low pay when, like the rest of his party, he wants to add to the costs of employment.

Mr. Bates

Does my hon. Friend agree with Klaus Kratzenberg, a supervisor with Black and Decker in Limburg, Germany? When asked why he thought that Black and Decker was closing its German plant and moving it to Spennymoor in County Durham, he replied: It is simple. Industry must be flexible—the social chapter isn't.

Mr. Forsyth

I entirely agree with the sentiments expressed by Black and Decker. I must tell Opposition Members that when companies such as Mercedes are starting to source outside Germany, and when Volkswagen, Peugeot and others are beginning to look outside Europe, alarm bells should be ringing in the minds of hon. Members who are genuinely concerned about jobs. There is no doubt that the social chapter is driving people out of work; the longer that Opposition Members adhere to it, the greater will be the possibility that people in Europe will embrace policies that will make their countries less competitive and less able to provide employment.

Mr. Prescott

In view of his many visits to America, will the Minister tell us whether he agrees with the Secretary of State's earlier statement that America had no minimum wage legislation?

Mr. Forsyth

I think that if the hon. Gentleman checks the record he will find that my right hon. Friend said that America did not have a national statutory minimum wage. However, I am grateful to the hon. Gentleman for reminding us of the international comparisons to be made. He will know that the European country that has embraced his policy of a statutory minimum wage is Spain—where the unemployment level is twice the European average, and twice the level in this country.

Mr. Anthony Coombs

In recognising the crucial importance of Britain's lower non-wage costs compared with the rest of Europe, is my hon. Friend aware that Lemmerz, a German wheel maker, has transferred all its heavy wheel-making operations to my constituency for precisely that reason? Is he also aware that carpet companies in my constituency are now going to Germany to buy up its now-redundant carpet-making machinery precisely because German companies cannot compete under the regime that has been imposed on them?

Mr. Forsyth

I am grateful to my hon. Friend for giving yet another example of the way in which the social chapter has exported jobs out of the Eleven into Britain. That is good news for Britain, so long as we ensure that we never ever sign up to the social chapter and its job-destroying characteristics.