Minimum Wage (Hansard, 18 October 1994)

§ 1. Mr. Luff
To ask the Secretary of State for Employment what assessment he has made of the effect of a minimum wage on levels of youth unemployment in other OECD countries.

§ The Parliamentary Under-Secretary of State for Employment (Mr. Phillip Oppenheim)
Minimum wages destroy jobs, particularly among young people. Youth unemployment is far lower in the United Kingdom than in France or Spain, which both have statutory national minimum wages similar to that proposed by the Labour party.

§ Mr. Luff
I welcome my hon. Friend to the Dispatch Box. Is he aware that the right hon. Member for Kingston Upon Hull, East (Mr. Prescott) has observed that any fool knows that a minimum wage— [HON. MEMBERS: "Reading."] I am quoting.

§ Madam Speaker
Order. We are not making a good start today. It is not in order for the hon. Gentleman to quote. I am sure that he can do well without that.

§ Mr. Luff
I shall paraphrase, Madam Speaker. The right hon. Member for Kingston Upon Hull, East has observed that any fool knows that a minimum wage would cause a shake-out in jobs. Could my hon. Friend give an estimate of the size of that shake-out?

§ Mr. Oppenheim
There are a number of estimates, ranging up to 2 million jobs. I shall give my hon. Friend another interesting quote. John Grant, who was Minister with responsibility for the low-paid under the last Labour Government, recently wrote in The Guardian that it was a "pious hope" to expect better-paid workers not to want to increase differentials if a statutory minimum wage were imposed. That increase in differentials would have an enormous knock-on effect through the rest of the economy, severely damage our competitiveness and lead to a massive shake-out in jobs.

§ Mr. Rooker
Has the Minister seen the report in The Birmingham Post today disclosing research that shows that, last year, increases for company directors in the west midlands averaged £50,000 a year? How can he preach to the low-paid that there should not be a statutory minimum 126 wage? Why are employers allowed to exploit the social security system, which has to spend £1 billion a year on family credit for low-paid workers?

§ Mr. Oppenheim
I may surprise the hon. Gentleman when I say that I, too, would like low pay rates to rise so that people are better paid. However, that must be done on a sustainable basis. The only sustainable way to improve the lot of the low-paid is to improve the productivity, efficiency and competitiveness of our economy and to enhance the skills and education of our work force. Those are the policies that we have been pursuing during the past 15 years, with the result that pay at all levels has risen substantially—in marked contrast to the position between 1974 and 1979, when productivity stagnated and so did pay. The rich may have become poorer under the last Labour Government, but the poor certainly did not become any richer.