ECC 19th Report: Voluntary Part-Time Work

HL Deb 02 December 1982 vol 436 cc1345-76

5.38 p.m.

Lord Seebohm rose to move, That this House takes note of the Report of the European Communities Committee on Voluntary Part-time Work (19th Report, 1981–82, H.L. 216).

The noble Lord said: My Lords, the Motion is, that this House takes note of the European Communities Committee on Voluntary Part-time Work—that is, the 19th Report of 1981–82. Sub-Committee C of the Select Committee on the European Communities received oral or written evidence from a number of organisations and individuals, including the European Commission, the Department of Employment, the CBI, the TUC, a clearing bank, the Equal Opportunities Commission, the National Federation of Self-Employed and Small Businesses, the Institute of Directors, Professor Hepple, Mr. Ben Patterson, MEP and several others. We are most grateful for the help we got from all these people, who had obviously done a great deal of research and hard work to help us in our deliberations. We were also helped throughout by Dr. Colin Leicester, whose specialised knowledge was invaluable to us.

Briefly, the directive is intended to ensure that regular part-time workers enjoy proportionately the same terms of employment as full-time workers in comparable employment; that is to say, similar hourly rates, holiday entitlements, sick benefits, pension rights and so forth. I am quite sure that the general public do not understand the real implications of part-time work in this country. I am sure that went for the committee at the beginning of our deliberations. We changed our views quite considerably as we went along.

I think I should perhaps therefore state some facts—not too many figures—to show what we are really talking about. As far back as 1951 part-time work was not unknown, but the ratio was about one part-time worker to 23 full-time workers. They increased in number fairly rapidly over the years and in 1981 it was no less than one part-time worker to four full-time workers; in other words, one-fifth of the labour force are now part-time workers.

It will be seen, therefore, that we are dealing with a very significant part of the workforce, which should be treated as something very serious and highly respectable. People say "only part-time workers", but that attitude should no longer be adopted. We find that these people are among the older population, and also among the very young. I suppose everybody knows that most part-time workers are women, of whom there are 3.6 million, while 700,000 are men. Both are growing in numbers. There were 4.3 million in 1981 and the number is growing, though more slowly. There is also a strong tendency for men to go in for more part-time work—again, for demographic reasons and when families change—which will, I think, be dealt with later by the noble Lord, Lord McGregor. Therefore, we are dealing with something which is a very stable part of the workforce, whose very size demands that it is protected against anomalies and discrimination.

The United Kingdom is by far the largest employer of part-time workers, both in numbers and—with the exception of Denmark—proportionately. It is therefore significant that at the meeting of the Council of Ministers the United Kingdom stated that it finds the directive unacceptable. It was alone in taking a line of outright opposition. It is understood that France supports the directive strongly; Italy, the Netherlands, Belgium and Luxembourg accept the directive as it stands and Germany and Ireland have reservations, but have indicated that they may give agreement after modification.

The Employment Protection Act 1978 fails to protect about 750,000 part-time workers, as the threshold for cover is set at 16 hours per week, or 8 hours if the worker has had regular employment for five years. This is equivalent to two days or one day per week respectively. The national insurance arrangements cover only those who earn £32.50 per week or more. These thresholds are arbitrary and have no clear rationale. The main objection by the United Kingdom Government appears, according to a letter from the Secretary of State for Employment to the committee, to be that there is no clear evidence that part-time workers are being unjustly treated; that there are sound economic or commercial reasons for applying different terms of employment from full-time workers and that this is a fact that is acceptable to part-time workers. He went on to point out that the implementation of the directive would reduce flexibility, increase employers' costs and decrease industry's efficiency, thereby decreasing the number of vacancies and increasing unemployment. These are very serious allegations and I think that I shall have to answer them seriatim, so far as I can.

First, as to evidence of injustice, the committee took evidence from the Equal Opportunities Commission, and we were convinced that there are certainly abuses and discrimination in the case of part-time workers. A small exampre is the wages councils, and in agriculture, for no particular reason, part-time workers are automatically granted wages which are 5 per cent. less than those of full-time workers on an hourly basis. We were satisfied, at the end, that there is a lot of injustice and discrimination, though the amount is not possible to assess.

Apart from the effect of increased costs, I doubt whether there would be any appreciable reduction in flexibility. Part-time work is essentially flexible. There are agreements which suit both employer and employee. I have a rather nasty feeling that the flexibility which the Secretary of State may have been talking about is, in fact, the flexibility where there is discrimination and some injustice. But I would remind the House that there is a pool of flexible labour, which is the temporary workers, casual workers, seasonal workers and so on, with which this directive does not at all concern itself.

There will be some increase in costs, which we do not at all deny. But I do not suppose that there has ever been any improvement in terms of employment which has not, in the short-term, meant some increased costs; I cannot think of any. But there is no doubt whatever that, over the years, improved terms of employment have increased efficiency, and probably productivity, to a considerable extent. So it has to be proved that the increase in costs will be considerable, if it is to be opposed on those grounds. The main component of rising costs is, I suppose, the benefits package; namely, access for part-time workers to existing sick pay and pension schemes, holidays, et cetera.

In the case of large employers, such as multiple stores, banks and the health service, our evidence was that the increase would be minimal. Barclays Bank thought that it might be 1 per cent., if they implemented the directive as it stands. The health service thought that it would be about the same figure. Sainsbury's evidence was of slightly higher costs. They thought that a change might increase their overall bill by 3 per cent., but nearly 60 per cent. of their employees are part-time and the main increase in costs in their case would be due to the pension scheme. These figures show that, for large employers, the increasing costs are minimal. The costs for small employers would be rather more, if they had to pay the national insurance charge which is on a poll tax basis and is a regressive tax. For people who work a few hours a week, it could be serious.

We should like to draw the attention of the House to the fact that the national insurance charge is the same, whether you are employed for 8 hours or for 40 hours. Therefore, it is a very bad, regressive tax. If only it could be made progressive and proportionate to earnings, rather than simply a poll tax, it would make a very big difference to the employment of part-time workers. I am sure that there must be a feasible solution to this. It is something which is a serious block to the progress of part-time work.

We have considerable objections to many of the articles, although the committee is in no doubt that the general objectives are sound. Also, we do not believe that a code of practice alone would be sufficient to put matters right; there must be some form of directive. Part-time work is becoming more and more acceptable to a wider range of workers, notably among men, and employees are becoming more inclined to expand the range of part-time work in their own firms. This is highly significant among the older workers, who are willing to move towards work sharing, but will hardly be encouraged to do so if their terms of employment are clearly worse than when they were working full-time.

Evidence produced to the committee shows that there are clear cases where the Equal Pay Act and the Sex Discrimination Act have been shown to be relatively powerless. About 13 per cent. of part-time jobs are at lower rates than full-time rates. The committee have concluded, therefore, that there are anomalies in the treatment of part-timers; that employment protection is arbitrary and fails to offer adequate remedy; that there is some discrimination, against which there is only limited protection under existing legislation; that the increased costs could be considerably mitigated by altering the regressive nature of the national insurance charge arrangements; that, since one in five employed in the United Kingdom are part-timers, the conditions of their employment need to be reviewed; that, as the United Kingdom employs 41 per cent. of all part-timers in the EEC, considerable weight will be given to its views and that, while representations should be made to amend the articles, the directive should not be opposed outright.

We visited Strasbourg a few weeks ago, and universally our report was given considerable praise. They felt that we had made a very good contribution to the discussion on the directive. In addition to that, on 4th October the Secretary of State gave an address in The Hague and he said—this was after our report came out— I am confident that we could make similar progress in extending the scope for part-time work. You may be interested to know that I have recently announced proposals in the United Kingdom for a scheme providing incentives to employers to create part-time jobs. This scheme has been notified to the European Commission and we are currently discussing it with them. It is experimental, but we hope that it will offer market-based jobs to more people and will offer more scope to those who wish to arrange their working lives in different ways".

I do not see how we can have it. both ways. If we wish to persuade more people to become part-timers, we are unlikely to do so if we say to them that they will have five or 10 per cent. less pay, that they cannot be in sickness benefit schemes, that they have no holiday entitlement, that they cannot use the canteen—and so on. This makes absolute nonsense of the whole argument. Part-timers have got to be accepted as a perfectly respectable, ordinary part of the workforce and of our way of life. Therefore, I beg to move.

5.50 p.m.

Lord Glenarthur

My Lords, I should like to congratulate the noble Lord, Lord Seebohm, on this very thorough and interesting report and to thank him and his committee members for all the meticulous work and patience they have put into their deliberations and recommendations.

The European Communities Commission's proposal for a directive on part-time work is currently under discussion by the European Community member states in the working group which serves the Council of Ministers, and has been since its publication at the beginning of the year. There is as yet little sign of the member states reaching agreement on a mutually satisfactory text.

The committee, as we heard from the noble Lord, Lord Seebohm, are broadly in favour of the directive. They conclude in their report that: There are anomalies in the treatment of part-time workers compared with full-time workers which need to be rectified and may not be removed on a voluntary or collective basis". Their support for the present text is not, however, unqualified. What is more open to doubt", they say, is whether the present draft directive provides a workable balance between the needs of the employed and the present economic situation". They put forward their suggestions for necessary amendments to the text of the directive, article by article.

I am grateful to the committee for their statement that the proposed directive may not, provide a workable balance between the needs of the employed and the present economic situation", because this precisely sums up the Government's view. We also believe that it is desirable that part-time workers should be protected against unjustified inferior treatment, although we are considerably more sceptical than is the committee about the extent to which such unjustified inequalities do in fact exist. All part-time workers who work the equivalent of two days or more a week, and many who work only one, enjoy equal protection with full-timers under existing employment protection legislation. The concept that the objective of protecting the employed must, however, be balanced against the needs of the economy and the need not to increase the numbers of the unemployed is absolutely crucial to the Government's position on this instrument. Our view is that the directive tips the balance far too far towards protection of the employed and that its cost may well be the jobs of those whom it seeks to protect.

Ironically enough, this directive forms part of the European Communities Commission's programme of measures on work sharing, the purpose of which is to increase employment in the Community. It therefore has a dual purpose: to improve the conditions under which part-time work is carried out and to increase opportunities for part-time work. The Commission regard these two objectives as perfectly compatible. Their argument is that if employers are made to treat part-time employees as well as they treat full-time employees, part-time work will be more attractive and more employees will wish to work part-time. This, they believe, will lead to a fairer distribution of available work across the working population.

The perhaps more pragmatic view of the Government is, as I have indicated, that the effect of the directive would be likely to be exactly the opposite of that envisaged by the European Communities Commission. In the Government's view, the directive, if implemented, would reduce opportunities for part-time work, at least in the United Kingdom. Its immediate effect would be a reduction in the number of part-time vacancies available, because it would diminish the attractiveness to employers of part-time employees. In the longer term it might lead to an overall reduction in employment since it would interfere with the flexibility of a sector of the labour market which currently operates very efficiently, to the benefit of the economy as a whole.

What grounds do the Government have for the belief they hold that the immediate effect of the directive would be to force employers to reduce the size of their part-time work forces? It has been argued—indeed, it is even suggested in paragraph 21 of the committee's report—that the demand for part-time workers in the economy is pretty much fixed. It is suggested that the demand is determined by operational factors, such as peaks and troughs of activity in the retail trade, and that part-timers are such a cost-effective way of meeting these needs that the sort of regulation envisaged could not possibly outweigh the benefits which employing them confers.

There is absolutely no evidence for this view. Indeed, we know very little about the flexibility or inflexibility of employers' demands for part-time workers. What we do know, however, is that the form of regulation proposed would increase the cost of part-timers and reduce their usefulness as a flexible form of labour. We have consulted employers on this point and received a unanimous response to this effect. More important, we know that the mere fact that regulation has been introduced would be likely to become an important factor in employers' recruitment decisions, particularly the recruitment decisions of smaller employers. We know this from bitter experience with other employment protection provisions. The right to complain of unfair dismissal is a case in point. If the existence of legislation can deter an employer from expanding his business because he is afraid to recruit, then it can certainly induce him to rearrange his work schedules in such a way as to avoid employing part-timers.

It is the Government's view that the matters covered in the directive—that is, the pay and conditions of part-time workers—are much better left to collective and individual agreement and the self-adjusting mechanisms of the market, than regulated by legislation. The United Kingdom has the largest number of part-time workers in the Community and the second largest proportion in the workforce. This indicates that this sector of the labour market is operating very well, to the benefit of both employers and employees.

The Government's view, then, is that the implementation of the directive in its present form would run a very heavy risk of discouraging employers from using part-timers, to the detriment of employers, employees and industry. Earlier I mentioned balance. This is the word used in the report. Is this argument outweighed by considerations of social justice? Are part-timers exploited and discriminated against to such an extent as to warrant measures of the type envisaged to protect them? The committee in their report conclude that such measures are warranted because differences of treatment and inequalities exist between part-time and full-time workers.

In the Government's view it is of paramount importance to distinguish between unjust inequalities of treatment resulting from prejudice—in other words, discrimination—and inequalities of treatment which result from legitimate commercial considerations. Thus, it constitutes unfair discrimination, for example, to refuse to employ a woman as a van driver because she is a woman but it is not unfair to choose a man in preference to her because he is a better driver. In the view of the Government it has not been proved that the difference in treatment between part-timers and full-timers which has been observed is the result of unfair discrimination and that a new legal right needs to be created. The differences appear to us to be the result of legitimate economic or commercial considerations. I am not sure, and the Government are not sure, that the committee have fully addressed themselves to this important distinction in their report, although they are clearly aware of its implications in the sphere of the proportionality of remuneration.

I think we would all agree that it would be unfair if employees treated part-timers differently in respect of their physical working conditions or refused them access to social facilities. I really cannot believe, however, that such unfair practices exist. But what about access to training and promotion? This is surely just the sort of area in which differences of treatment may exist for perfectly legitimate reasons. As currently drafted, the directive would not permit employers to treat part-timers differently for sound management and commercial reasons. They would have to promote two part-time workers to fill one full-time supervisor post and incur the double training cost involved. The Government might succeed in getting the directive amended so that differences in treatment would be permissible where there was a legitimate, objective reason for inequality, but employers would still have to go to the tribunal to argue that reason.

Let me now consider pay, briefly. The committee state in their report that the evidence supports the view that there are differences in hourly rates between part-time and full-time employees. The Goverment would agree that there are differences, but there is no evidence to prove that part-timers and full-timers generally recieve different rates of pay for the same job. It shows that part-timers are usually in lower grade jobs and that is why they are lower paid.

To sum up, the Government's position on the proposed directive is as follows. We believe that part-time employees should not have to suffer unjustified inequalities of treatment in relation to full-time employees. But this objective must be set against the needs of the economy and the need not to deprive those same employees of their jobs. We consider it very likely that the measures proposed would have a significant effect in reducing the number of part-time vacancies available. We do not consider that the need for the proposed measures has been shown to be sufficiently great to outweigh those opposing considerations; we do not consider that a binding instrument is appropriate in this area.

6.1 p.m.

Baroness Seear

My Lords, I must first apologise to your Lordships because, owing to an engagement entered into long before I knew about this debate, I shall not be able to attend very much longer after I have spoken. I would also like to thank very much the Labour Front Bench in general and the noble Lord, Lord McCarthy, in particular for arranging for the same reason, for my personal convenience, to reverse the normal procedure whereby he would have spoken after the noble Lord, Lord Glenarthur.

Having thanked the noble Lord, Lord Glenarthur, I must say that I found his exposition of the Government's point of view extraordinarily difficult to follow. I followed it but I could not follow the logic behind it. What he seemed to be saying on the one hand was that there really was no injustice; that part-timers were treated perfectly properly; and that there were very few part-time workers who were being "done down". In the very next breath, the noble Lord said that it would cost a phenomenal amount to redress the difference between part-time and full-time workers; that industry would not be able to afford this; and that the economic effects of these adjustments would be so damaging that a considerable number of people would lose their jobs. The Government cannot have it both ways. Either there is considerable inequality which will cost a great deal to redress or there is not considerable inequality, in which case any remaining inequalities will cost very little to redress. I regret that I shall not be present to hear the noble Lord, Lord Glenarthur, when he explains the logic of his statement, but I will, of course, read it with very great interest in Hansard tomorrow.

I accept that it may be that this directive is yet another example of the passion which the Commis- sion seems to have for going into a degree of detail for which a directive is not an appropriate instrument. As I understand it and have always understood it to be, a directive is meant to indicate the objective to be attained on a particular principle in a particular area of policy, and that the members of the community are allowed to adjust their existing legislation in such a way as to achieve that objective. But I have always understood that the directive is not supposed to lay down in very great detail how that objective is to be achieved.

It seems to me that in recent years—and this point has been raised before in your Lordships' House—there has been a marked tendency for the Commission to put into directives a degree of detail which tends not to be compatible with what a directive is supposed to be. To that extent I agree that there are details in this directive which it would be desirable to have adjusted, and surely the Government of this country. which—as the noble Lords, Lord Seebohm and Lord Glenarthur, have already pointed out—has a very high number of part-time workers and a very high percentage of them in relation to all other members of the EEC except Denmark, are in a very strong position to argue for the kind of directive and details, if we must have details in a directive, which are appropriate based on our considerable knowledge of part-time employment and the problems and issues which it raises.

That, I fear, is as far as I can possibly go in agreeing with the point of view put forward by the noble Lord, Lord Glenarthur. It seems to me that there are two overwhelmingly strong reasons why we must urge the Government to reconsider the approach they are basically taking towards this directive. The first has to do with the position of women in the labour market. The noble Baroness, Lady Lockwood, will speak with greater authority and in much greater detail than I can on this aspect of the directive, but to me there can be no doubt that, in the past and at the present time, a great many women have been extremely anxious to obtain work on a part-time basis—for domestic reasons, and because of the great inadequacy of the child care provisions in this country, which have made it impossible in practice for a very large number of women to take employment unless that employment is part-time. Whether they should be in part-time employment or not and whether other steps should be taken to make it easier for them to take full-time rather than part-time work is another issue, and one that we are not discussing this evening. In any event, it has undoubtedly been the wish of a very great number of women to obtain part-time employment.

The fact remains that, for a great many women, part-time employment has been a snare because these jobs have been seen as jobs exclusively for women and as jobs at a very low level. They are almost "ghetto" jobs in that they are jobs from which a woman has very little chance of advancing and which offer very low levels of pay. A great many women have settled for jobs of that kind. Had the position been different, they would have certainly advanced much further into the labour market and made a contribution to the economy far more in keeping with their capacities than they have been able to do. Women have to a large extent been trapped in these jobs.

There is no doubt also that part-time workers are relatively difficult to organise from the point of view of the trade unions and, as a result, they have to some extent been exploited. If one is serious about one's desire to give women appropriate opportunities—opportunities compatible with their capacities—then one must adjust the position of part-time work so that it is not seen as being exclusively work which women take; and that is the view taken of it at the present time, although I know there has been an increase in the number of men in part-time work. Overwhelmingly, it is women who still go in for these jobs. They are jobs which are regarded as being very low-grade, dead-end jobs with very little opportunity for getting out of them. It is urgently necessary from the point of view of women in the labour market that the nature of part-time work in this country should be altered. If there were no directive, there would be a very strong argument for saying that we want to see some of the differences of conditions between part-time workers and full-time workers reduced, if not totally abolished.

The second reason why the Government should reconsider their approach is that surely we want to encourage people to take part-time work—men as well as women. When we have been debating questions of unemployment, as we have done on a number of occasions over the past months, we have all agreed that the hope that all men as well as all women are going to obtain full-time jobs is a will-o'-the-wisp for many years to come. It is highly desirable that men should be encouraged to share jobs. The Government have been sufficiently converted to this point of view that they are encouraging the splitting of jobs in older age groups. But it ought not to be only among the older age groups that it is made acceptable for men and women who wish so to do—and of course it will always have to be voluntary—to enter into job-sharing arrangements.

As the noble Lord, Lord Seebohm, has said, if those part-time jobs do not have the same benefits proportionately—one is only saying they should be proportionate—as are carried by the full-time jobs, what hope is there that all except a very few men are going to volunteer for jobs of that kind? In particular, there is the question of training, so that as new opportunities develop' people will be able to take advantage of them. Above all, there is the question of pensions. If there is one thing that is going to stop the development of job sharing it is the effect the job sharing has on pensions. As long as part-time work does not carry appropriate pension rights—it is difficult enough if it only carries proportionate pension rights—there is no hope whatever that more than a handful of men in their middle years are going to consider job sharing, because they simply cannot do it.

So for these two reasons, the opportunity that this directive gives us to change the nature of part-time work being carried out by women, often to their long-term detriment; and the even stronger reason perhaps at the present time, to make part-time job sharing a reality for both men and women in all age groups, with appropriately good conditions, as a Continuing contribution to reducing the total number of unemployed, I do very much hope that the Government will take a root and branch look at their present opposition to this directive and see in what ways they can meet its intentions.

6.12 p.m.

Lord McCarthy

My Lords, I want to do two things this evening. I want, first of all, very much to congratulate the noble Lord, Lord Seebohm, and his committee on an excellent report, with which I think we on this side broadly agree. I will say a little about that in a moment. Secondly, I want to explore what I take to be the main objections raised by the noble Lord, Lord Glenarthur, which are, as we would have expected, the usual alliance of views of the Secretary of State for Employment and a representative group of small businessmen, the Institute of Directors and the rest of the circle of people who go round and round the mulberry tree in Lord North Street.

But before I do that I would like to congratulate the committee. Here I think the Minister was very selective in his quotations. As I understand them, they are saying two things: first, there is no case for the present Government's position, there is no case for outright opposition to this directive. That did not come out in the Minister's speech. Secondly, there may be a case—and here I think that the noble Baroness, Lady Seear, said a lot of things with which I would also agree—for some amendment, for some change in the draft of the directive as it exists at the moment; in particular, for some change perhaps in the kind of conditions which appear to be imposed for pension schemes, both occupational voluntary pension schemes and statutory pension schemes. That seems to me to be the general position of the committee. I would go along with that.

The only point at which I would disagree with the committee—I am not sure I have got them right, but I think I have—is that in paragraph 16 they seem to be saying that they would be in favour of a general lowering of the exception limit, so that it would not be absolute and there would be some people in some circumstances who would be, as it were, outside the net. I think that might be all right in the particular case of occupational pension schemes and statutory pensions and national insurance contributions, but I would not want to say that there need to be any exceptions of any kind in respect of, for example, employment protection legislation; I see no justification for that at all.

Therefore, one comes to explore what one takes to be the main objections raised by the Government. As I have listed them and understood them, they are six. First, as the noble Lord, Lord Glenarthur, said, there is no discrimination really worth talking about, and that which there is is not very significant. Secondly, if there is any significant discrimination, then workers are not complaining about it; they seem to be perfectly happy with it. Thirdly, in any case, even if they were complaining about it and it did exist, there must be some justification for discrimination, for less than equal treatment, because it costs more to administer the employment of part-time workers. Fourthly, even if that is a little implausible to justify the degree of discrimination which is there, and which is there in the report, you cannot do much about it because it is quite objective; it is related to the relative market values of part-time and full-time workers. Fifthly, even if this is a bit far-fetched, it so happens that if you eliminate it by law you just reduce the number of part-time workers, because, although there is not much of it, it is so expensive that it will put part-time workers out of a job.

There I think I bow to what I would call the Seear's paradox, or if I can mix my metaphors, the upper and nether millstones of the noble Baroness's argument. I look forward to seeing how the noble Lord the Minister gets out of it when he comes to speak. So, they say, "If we do anything about this we would be reducing employment". Finally, if all else fails, the Government say you cannot do any of this because the Commission, in suggesting this kind of thing, has exceeded its mandate; the original resolution was to facilitate employment of part-time people and it has gone far beyond that. These seem to me to be the six arguments of the Government.

First, the Government say that there is no discrimination worth talking about. The Secretary of State in his letter to the committee, at page 131 of the report, said: There is no clear evidence that part-time workers are being unjustly treated. This kind of approach was repeated by the noble Lord this evening. The trouble is that such statements are exposed by the evidence of this report, most notably by the evidence put in by Professor Hepple, by the Equal Opportunities Commission, by the evidence of the Low Pay Unit, and indeed by research, actually sponsored by the Department of Employment itself, admittedly by the previous Government, encased in the Robertson and Briggs Department of Employment Gazette article of July 1979.

If you put all this evidence together it shows quite significant discrimination; for example, that part-time women get up to 10 per cent. an hour less than full-time women. It is very difficult to believe that all that is due to job classification, as the Minister suggests. It suggests that, so far as the benefits package is concerned, this is usually inferior for part-time workers as against full-time workers; most of them get no sick pay, no holidays or pensions, or significantly less than those of full-time workers. It suggests that they are the first to be declared redundant irrespective of how long they happen to be employed. We do not need research for this because the Government admit it. There is a whole range of statutory rights, employment protection rights, redundancy payments and so on, where part-time workers below an arbitrary threshold which has never been defended, are excluded from all legal rights.

So it seems to me that the mere publication of this report destroys the first leg of the Government's argument, that there is no discrimination worth talking about. So they must rely upon the second of their five or six defences, that nobody is complaining. Once again the Secretary of State in his letter to the committee said that such differences as exist are, a fact which part-time workers are ready to accept as a consequence of the nature of their work. In our view, arrangements between part-time workers and their employers are best left for voluntary agreement either individually or through collective bargaining. My Lords, it is tempting to say, how does he know? It is tempting to ask, do they have an alternative?

The fact is, as the noble Baroness said, that we are dealing for the most part here with ghetto areas of the labour force, with groups who are extremely difficult to organise, to unionise, and which need statutory protection. If the argument that the people who suffer these things are not complaining were to be generally accepted, we would never have abolished slavery, we would never have established the trade laws for sweated industries, which the Government are about to abolish, and we would never have taken children from the mines. Of course, just because people are not complaining it does not mean they are not suffering. That is no kind of argument at all when one is dealing with these areas of the labour force.

We come to the third argument, the third defence, that it costs more to administer part-timers and, therefore, one cannot expect to have parity. Once more I refer to the Secretary of State's letter which he sent to the committee. This is presumably what is behind the Secretary of State's somewhat delphic references to "sound economic and commercial reasons." That, presumably, is what he means. There are several answers. First, how does it come about that these sound economic and commercial reasons precisely mirror the size of the gap? How do they precisely establish the fact that, for example, in general terms one sees a 10 per cent. wage difference between part-time and full-time women workers? How do these administrative extra costs justify the absence of sick pay? How could they possibly justify the total exclusion from all forms of statutory unemployment and sickness benefit anyone who earns less than £32.50 a week?

There are two points to make about the relative costs of employing part-time rather than full-time workers. The first is—once again one must take up the drift of the Minister's argument—that there is now a considerable body of research, much of it listed in this excellent report, by people such as Robinson, Robertson and Briggs, Hakin, Morley and Sawbridge, and so on, which totally takes away any mystery about why British employers are employing more and more part-time workers. It is a consequence of changes in the structure of British industry and of a move away from manual work in the heavy industries towards distribution and commerce, and so on. It is a function of the fact that in those industries there are substantial technological and organisational advantages to employers in a move toward part-time labour; that part-time labour provides for flexible extended hours coverage; that part-time labour results in lower rates in absence and turnover, especially in dull, routine jobs, and that part-time labour appears to produce higher rates of productivity over a wide area. Indeed, research from other countries—for example, Denmark and the Netherlands—indicates that these advantages to employers survive when rates of pay and benefits are equalised. There is no mystery about this and the general drift of the body of research is against the Minister.

The second point to make is that where we can get details—and often we cannot, particularly from objectors to the general drift of the directive—of the costs of removing discrimination, as the noble Baroness said and as the noble Lord, Lord Seebohm, said, they turn out to be trifling. For example, on page xv of the report we are told: The biggest single employer of part-time workers is probably the Public Sector … preliminary estimates from the Management and Personnel Office indicate that they would add less than 1 per cent. to the pension bill and that overall 'the cost' "— that is, the overall cost of carrying out the directive— 'would probably be minimal.' Again, if we take the representatives of Sainsbury and Barclays Bank who gave evidence to the committee, as was mentioned by the noble Lord, their evidence is that the overall cost would be trifling, which is not to say that it would not be significant for the individuals concerned.

One must admit that all this contrasts sharply with the much more alarmist suggestions of the Institute of Directors, the National Federation of Self-Employed and Small Businesses, the Mail Order Traders Association or the Secretary of State himself. In that letter he said, Our consultations have confirmed that the effect of the directive would be to increase employers' costs and decrease industry's efficiency"— a magnificent non-sequitur— thus resulting in a reduction in the number of part-time vacancies available and an increase in unemployment". There are several things one could say about that. The first obvious point is that it just shows who the present Secretary of State consults. We know he does not consult the TUC. Apparently he does not consult Sainsbury. Apparently he does not open the letters he gets from Barclays Bank; and apparently he does not ask his own Management and Personnel Office in the Treasury, which says, and it is the biggest single employer, that the overall cost is trifling. So who does he consult? Consultation like this is a bit like the practice we are told used to occur in the last days of Hitler in the bunker. Hitler would get up every morning and send out for good news. He would say to the generals, "And don't come back until you get some." That is the sort of consultation that the Secretary of State wants—consultation with the Institute of Directors and the National Federation of Self-Employed and Small Businesses and the Mail Order Traders Association who agree with him but, unfortunately, have absolutely no figures to support what they say.

Secondly, it just shows the level of economic analysis which is a great fall away from the good days of the Department of Employment when I used to know it. This is worth a word or two. Every first year economic student knows that even if labour costs rise, and even if they rise significantly, it does not follow automatically that one has an employment effect. It depends on the extent of the cost increase, on whether labour costs are a high proportion of total costs, which they often are not in this area; it depends on whether they can be offset or whether they feed into prices; it depends on whether prices rise and that affects product demand, and on whether the fall in demand is transmitted to labour demand. But most important of all, it depends on whether the employer decides to have the increase in cost measured in terms of an employment effect or in terms of a wage effect.

If the Secretary of State came to us and said, "The trouble with this is that it will not benefit these poor God-forsaken women, because all that will happen is that if, by statute, you impose an additional cost on the employer all he will do is not give them a wage increase next year, both men and women". In other words, there will be a price-wage effect rather than an employment effect. That would be implausible, but his economic logic would at least be defensible. But no, he does not tell us about the extent of the cost increases or the amount of the offset. He just assumes automatically that this will be an employment effect. I suggest that any first year economic student who handed in an essay of that kind would be asked what he had read. Therefore, on these grounds we cannot defend the Government's defence number four, that discrimination is limited to the difference in market values—there is no evidence that it is—or defence number five, that to eliminate by law would necessarily undermine employment.

We come to the final, the sixth, justification; the sixth veil which surrounds the Secretary of State or the Minister, that even if all this is so we cannot do it because the Commission has exceeded its mandate. Indeed, somewhere buried away in this report—I apologise to the House because I cannot find it—some chap who came along to the committee actually said that it was against the Treaty of Rome. I think that is good. This little thing is against the Treaty of Rome or, in the words of the Secretary of State, such proposals would be contrary to the declared aims of the Council's resolution. That is the ultimate disingenuousness. It is only true if one accepts the Government's own unlikely scenario; that there is an iron link between marginal increases in labour costs and the rate of unemployment; that there is no possibility of a price-wage effect or of the cost being absorbed; that this wipes out all the advantages and, therefore, one cannot protect any worker or any group of workers—this is the logic—however much they may be, as the noble Baroness said, ghetto workers, working in a ghetto. This is put forward as laissez faire economics.

That type of argument was rejected by Marshall. Even Marshall was in favour of protecting workers in ghetto situations. These people go back to before Marshall. That is the approach which has led to the Young Workers' Scheme, when millions of pounds of public money has been showered down without evidence of one extra job. That is the logic behind attempts to drive down the training rate of the Youth Training Scheme; that is the logic behind the threat to abolish wages councils and the fair wage resolutions depite our obligations to the ILO; and that, of course, is the philosophy which underlies much of the determination of the present Secretary of State to press on with the grandson of the 1980 Employment Act. Those of us who do not live in the dark ages and who do not subscribe to this broken doctrine, have no reason to agree with the Government.

6.31 p.m.

Lord Allen of Abbeydale

My Lords, I rise to speak in this debate with very considerable diffidence when I look at the expertise of the other Members of your Lordships' House who have put down their names to contribute, because I can certainly claim no expert knowledge. However, as a member of Sub-Committee 'C, I found the subject a fascinating one and I should like to pay my tribute to the way in which my noble friend Lord Seebohm guided us through our deliberations of what is really a rather complicated matter, and to the way in which he has so succinctly put the main considerations affecting this draft directive in his speech this evening.

I am afraid that I find it difficult to speak with quite the same enthusiasm about the speech of the noble Lord, Lord Glenarthur, however, elegant its phraseology. Like the noble Baroness, Lady Seear, I was rather puzzled at reconciling two of the main elements of that speech: one, that there is nothing really wrong at the moment at all and there is no evidence of abuse but, secondly, that it would ruin industry to correct the abuses which do not seem to exist. I wait with some interest for the end of the debate to hear the Government's explanation of how these two are reconciled.

I must say that I personally began with some prejudice against the directive. I cannot help thinking sometimes that in this country there are rather too many restrictions already on the use of labour, and at the start I wondered whether this was another effort by the Brussels bureaucrats, with their passion for harmonisation, to go in for even more restrictions when there was no real need. But the more evidence we heard—and I began to doubt a little in the earlier speech whether the noble Lord's advisors had really read the evidence—the more I became persuaded that there was a real issue here and that the Commission proposal had rather more to it than I had originally appreciated.

The figures which the noble Lord, Lord Seebohm, quoted at the beginning of this debate show how important—and increasingly important—part-time work is in this country; and the question of how this very considerable section of the community is to be treated raises issues which simply cannot be swept under the carpet.

Some of the difficulties in going down the path signposted by the draft directive speak for themselves. Everyone would agree that it must be right to look very carefully, and to look more than once, at anything which might increase the costs of employers at the present time and possibly—although I take Lord McCarthy's point—as a result put existing jobs at risk. Looking at the draft directive itself, I am sure that there would be general agreement that not all the articles would do as they stand.

It was of some interest, though, as regards the visit to Strasbourg to which the noble Lord, Lord Seebohm, has already referred, that we met representatives of the Commission who made it clear that they had already taken aboard some of the criticisms made of the draft in the report that we are discussing this evening, and seemed prepared to accept the validity of at any rate some of them. I am well aware that other countries have also been filing in observations and suggested changes, and that not all the suggested alterations may in the end turn out to be of advantage from our point of view. It is no good denying that there are, indeed, formidable problems in accepting what the draft directive proposes, either in its present form or in the form in which it might later take shape. But there are very important considerations pointing the other way.

A good deal of the evidence we received suggests that the extra expense involved, and the risks of actually curtailing employment, may not be as great as is sometimes suggested—for example, in the propaganda we have all had from the CBI. It is fairly clear that many of the large firms are already well within the intentions of the directive, and that the extra cost of implementing the main provisions of the directive would not be all that great. It is also not to be overlooked, as has been pointed out, that the directive is concerned only with those employed under a rather formal agreement, and is not aimed at the casual worker, the seasonal worker or the self-employed.

Quite often, too, the simple fact is that there is a genuine need for a part-timer to do a particular job and that it just does not make economic sense, or any other type of sense, to employ someone full-time to do a part-time job or to do away with a job which needs to be done. Certainly the prospects of getting a wider use of job sharing would be enhanced if conditions of service for the part-timer were improved. I am sorry that the noble Lord did not comment on this very important point which the noble Lord, Lord Seebohm made, but I expect that he will do so when he comes to reply to the debate.

It is no good blinking the fact, though, that there is a problem in relation to some of the small firms on whose prospects the economy is greatly dependent. One particular aspect of the problem relates to Article 3 of the directive which has been mentioned and which deals with social security benefits. With us, the threshold for national insurance is calculated on the basis of pay, not hours (unlike the entitlement to redundancy pay) and the threshold, at £32.50 a week, as it soon will be, is pretty high. Article 3 is drafted in such terms that our arrangements would be acceptable under the directive as I understand it, but the fact remains that the figure at which the threshold is fixed, and the consideration that if you step over the threshold you are then in the national insurance scheme 100 per cent., results in a considerable distortion of the part-time labour force.

Hours and rates of pay may well be adjusted to make sure that the employee is paid below the national insurance figure so that there is no national insurance contribution to pay, but no national insurance benefits to be received either, apart I suppose from industrial injuries benefit. It was for that kind of reason that the report urges the DHSS to undertake a review of the present scheme at the bottom end and to consider whether there is perhaps some prospect of altering it so that those near or below the threshold pay a reduced amount and become entitled proportionately to reduced benefits. We realised well enough that this could mean extra administrative costs and the further complication of a scheme which is not at present characterised by undue simplicity, and we were not so foolish as to think that a solution could be worked out overnight. But the present position is not satisfactory, and there are many people involved. As the noble Baroness, Lady Seear, has already pointed out, entitlement to pension will be absolutely crucial if the job-sharing scheme is to develop.

Then there is the problem about occupational pensions. Article 3 of the draft directive should anyway be amended to make it clear that there is no obligation to provide even better treatment for the part-timer than for the full-timer. I gather that there is some pressure from other countries that the provision about occupational pensions ought to be cut out of the draft altogether. But if it is kept, and if it is altered to make provision simply that the part-timer should be entitled, in proportion, to the same rights as the full-time employee, it would mean that there would be new burdens on employers, whether or not the scheme was contributory. If it was contributory, then the employees would have to pay more, and certainly many would be reluctant to do so.

This problem clearly would not arise in the very many small firms which do not have their own occupational schemes. Where it would arise it is anyway for consideration whether this is not a price which should properly be paid for improving the lot of the part-time worker in a particularly important respect. In my mind there is not very much doubt that some improvement is necessary as a further instalment on our long history of labour legislation.

The noble Lord, Lord Glenarthur, argued that the directive would militate against the flexibility which currently holds the field. But flexibility to do what? To continue to employ on a considerable scale—hundreds of thousands of people—people who fall outside the law protecting employment? To get by with giving a lower rate of pay? To bypass the legislation about sex discrimination and equal pay? To avoid giving proportionate access to sick pay, holidays and the use of social amenities? To ensure that there is no entitlement to national insurance benefits?

Other countries, we know, have doubts about some of the provisions in the directive and want to see changes, but, as I understand it, we are the only country which so far has taken a root and branch objection to the whole directive. I wonder whether it is right that this is a proposal on which we should remain the odd man out, and I hope that the Government will think again about their stance. I believe that they should.

6.44 p.m.

Lord Boardman

My Lords, the noble Lord, Lord Allen of Abbeydale, has raised some interesting points on the various articles, but as, like my noble friend, I am opposed to the directive as a whole, I am sure he will forgive me if I do not follow him on those points. I am a director of companies which employ a large number of part-time workers and to that extent, of course, I declare an interest. But I am expressing an entirely personal view in the points that I raise and they are not necessarily those of the companies to which I have referred.

The purpose of the directive is to assimilate the rights of part-time workers with those of full-time workers. It is well intentioned, but, like my noble friend on the Front Bench, I believe that it will cause most damage to those whom it is intended to benefit. We in this country are particularly vulnerable. As has been pointed out, we have the highest proportion of part-timers within the Community, with the exception of Denmark. I congratulate the noble Lord, Lord Seebohm, on the work that his committee put in and I found the report very readable, although, as your Lordships will hear, I am unable to agree with its conclusions. The conclusion reached by the committee was that there was a need for legislation. I do not agree and I am delighted that my noble friend Lord Glenarthur and the Government do not agree, either.

The opinions expressed divide into two groups. First, there are those in favour of the directive who, with great respect to your Lordships, largely appear to be from the academic school. There are those—and this appears from the evidence—opposed to the directive who, in the main, are the employers. Indeed, my noble friend said that the Government had widely consulted employers and that they were unanimously opposed to the directive. I find almost surprising and somewhat disappointing the arrogance—and I hope that the noble Lord will forgive me but I use the term "arrogance" in no personal sense—with which the noble Lord, Lord McCarthy, and some others from the academic world think that they know so much more about the problems facing industry and commerce than those who spend their lifetime engaged in it. It is a somewhat recurring theme. I found it disappointing that in the report so little weight appeared to be given to the arguments of those who were opposed to the directive.

First, we had the evidence of the CBI. Having listened to the noble Lord, Lord McCarthy, refer to the evidence of those opposed, saying that they were small groups going round and round the mulberry tree of Lord North Street, I hardly think that that would be a description that he would wish to apply to the CBI, which represents such a large part of British industry and commerce. At page 32 they say: this proposal could undermine the competitiveness of some enterprises and would, therefore, reduce the ability and willingness of enterprises to provide more opportunities for part-time employment. The proposal has no apparent relevance to its original aim of reducing unemployment in the Community"— and so on.

Then we come to the National Federation of Self-Employed and Small Businesses Limited. I quote from their evidence at page 41: There is little point in making part-time work more attractive to employees if, by doing so, it is made less attractive to employers". How right they are. The noble Lord, Lord Seebohm, referred to the evidence given by Barclays Bank and to the additional costs which they stated they would incur, as being minimal. As is shown in their evidence on page 51, it is an increase of 1 per cent. on their salary bill or some £4 million. I do not consider that to be minimal, even with a very large company, particularly when their evidence goes on to say, as it does: I do not think that it would lead us to employ more or fewer". In fact, it would have no impact at all upon the level of employment of the part-time worker.

Then there was the evidence of GEC Telecommunications Limited, and I quote from page 113: We believe the Directive interferes unnecessarily with things which are currently easily settled between employers and employees and that it is likely to create more problems than it will solve". I turn to the Retail Consortium; very large employers of part-time workers—or their members are. From page 143, the directive, may well have the effect of making part-time employment uneconomic, increasing the costs of retail enterprises, and jeopardising the full-time jobs of workers in those enterprises where flexibility is required in order to maintain a competitive service—a flexibility which necessitates the employment of a certain proportion of part-time staff. The Institute of Directors, on page 158; The Institute of Directors is in no doubt that the proposed Directive should be utterly opposed by the UK Government. It goes on to give the reasons.

The noble Lord, Lord McCarthy, quoted Sainsbury's, and implied that Sainsbury's saw benefits in the directive. What he omitted to say was that in their evidence—and I think this comes on page 38 of the report—they said that it could cost another 3.3 per cent. on the total labour costs full-time and part-time. I do not believe that those can be looked upon as being insignificant costs; they would have to be passed on to the ultimate customer, unless there are some real benefits to be gained from incurring them.

Every employer, and employer organisation, that gave evidence was either strongly against the directive or, at the best, said that it would produce no benefit to unemployment. We cannot fly in the face of such advice. These are the people giving evidence, or members of the association that put in evidence, who provide the jobs. I do not believe that their advice should be disregarded in favour of advice from academics or university professors, however distinguished they may be, but who have less practical experience of working in operations which involve a large number of part-time workers.

Your Lordships will probably recall the Employment Protection Act 1975.I believe that many of your Lordships will agree that that Act cost far more jobs than any other single measure in recent years. It was amended in 1980. The directive would reverse the benefit that came from the amendments made in 1980. The directive could have a savage impact upon the small firms. I will not attempt to go over the evidence included in the report to show what weight of support there is for the argument that the small firms would suffer substantially from this.

The directive would add significantly to bureaucracy. It would add to the administrative costs of companies. The only benefit for employment would be the additional bureaucrats involved. I was told today of a large company which, in one department alone, has 70 separate forms of contract for part-time workers. They said how impossible it would be to try to introduce proportionality, or profit sharing, for each of those contracts which covered such an enormous range of different operations. You may suggest, for example, that a part-time worker may have to be paid more than a whole-time worker if travelling costs, late-night working and such, absorb a greater proportion of the take-home pay. There are countless permutations. In one department there are 70 different special conditions which apply to people in that department.

I shall not repeat the arguments which have been put forward in the report, or which have been so well put forward by my noble friend. I believe that we should tell the Commission to concentrate on areas which will increase employment and stop interfering in relations between employers and part-time workers which are very satisfactory, and the terms of which have been satisfactorily settled between the parties direct.

There is a final point prompted by Lord McCarthy's reference to the constitutional issue, or to the powers under the Treaty of Rome. It is made—I think well made—in the Institute of Directors' submission in paragraph 14. Their objection to the directive being brought in under, I think, Articles 100 and 117, is correct. I shall not pursue that, because my objection to the directive is on its merits or, perhaps I should say, on its lack of merits.

Lord McCarthy

My Lords, before the noble Lord sits down, may I say this. The noble Lord has referred to my reference to Sainsbury's. Would he agree with me that if you read the report carefully, what the representative of Sainsbury's was saying—and this is on page 38—is that his assumptions of 3.3 per cent. were of the worst kind; that is to say, nocontracting-out of his own pension scheme and no statutory scheme?—both assumptions which are in fact quite false.

Lord Boardman

My Lords, of course I agree with that. I said "could". I accept fully what the noble Lord says that as the directive is at the moment on the most adverse interpretation it could add 3.3 per cent. to the total. I fully accept that.

6.57 p.m.

Lord McGregor of Durris

My Lords, it is apparent that we are debating a difficult issue. Whatever the demerits of your sub-committee's reports may be, obscurity is not among them. I should like to join with the noble Lord, Lord Allen of Abbeydale, in expressing my thanks, and I am sure those of other committee members, to the noble Lord, Lord Seebohm, the committee's chairman, for the skill and ability with which he guided our discussions. I found the speech of the Minister, the noble Lord, Lord Glenarthur, narrow, disappointing and depressing. He referred to what he called the pragmatic view of the Government that nothing is wrong, and also stated that little is known about part-time workers. Yet he did not hesitate to make confident and highly speculative assertions about the effect of implementing proportionality between full-and part-time workers upon the willingness of employers to employ part-time workers.

However, I do not wish to discuss the details and present day problems. To the regret of the noble Lord, Lord Boardman, I am an academic person and I intend to inflict an academic commentary, mercifully short, upon your Lordships. I wish to stand back from the immediate issue and provide a perspective from which I think one can make a commentary upon the Government's view of the report. I start with a silent demographic revolution which has taken place during the last 50 years. There have been changes in the sex ratio. The surplus of unmarriageable women has disappeared. There are now more men in the marriageable age groups than there are women. We have more marriage. We have a high propensity to marry. We have younger marriage. All this, associated with the continuing habit of mild reproduction which has become firmly established, has had the result that extremes of family size have been eliminated. Very importantly, we have been engaged in the process that the Registrar-General calls compressing our fertility, by which he means that nowadays the very large majority of babies are born in the very early years of their parents' marriage. And there has been a considerable increase in the duration of marriage, with one major result: in the past, women, if they were lucky, got a husband, he fathered upon them the maximum number of children they were physiologically capable of bearing, and they reared them and died. Nowadays, the average mother has 20 to 25 years of active adult life after her youngest child has reached school-leaving age.

Those demographic changes have resulted in fundamental changes in women's entry into the labour market and in their occupational experience. First, there is the myth that women came into the labour market only as a result of the two world wars. In fact, women have constituted 30 per cent, of the country's labour force for the last 130 years, a proportion which has now risen to more than 40 per cent. In other words, more than 40 per cent. of our labour force is made up of women.

On the eve of Hitler's war, only 10 per cent. of women in the labour force were married. The remainder were out at work between leaving school, younger than they do today, and getting married, later than they do today, and when they got married they withdrew from work altogeher. Today, almost two-thirds of women workers are married, and the pattern of women's work is that a high proportion of women are at work in their late teens; the proportion falls steadily during the process of family building; in their 20s and early 30s, it then rises again as the children go to school and become reared, with a situation in which two-thirds of women aged 42 or more are back at work, and there they continue, their numbers dropping slowly until the age of retirement.

It is against that background that we have to see the huge increase in part-time work in the last 30 years, to which the noble Lord, Lord Seebohm, referred in the opening part of his speech. The number of women part-time workers—83 per cent. of all part-time workers are women—has increased four fold since 1951, and it stands now at some 3½ million. Although there are only 700,000 male part-time workers today, their number has grown sixfold in the last 30 years, and the committee were told that as many men as women were now prepared to take part-time work.

I set out those figures in order to make the same point, from a slightly different angle, that was made by the noble Baroness, Lady Seear. What we are here looking at is a core development in the so-called emancipation of women. For the reasons given by the noble Lord, Lord McCarthy, changes in the industrial structure and in the demand for labour have resulted in an increased need for part-time workers. This increased need has coincided with demographic and social developments which have brought women, as part-time workers, in large numbers because part-time work enables them to adapt the process of family building to the needs frequently of their families for a supplementary income during the period when children are at their most expensive.

Therefore, just at the point of time when Victorian emancipation—that is, the achievement of formal legal equality—was coming to an end, in the 1950s, very large numbers of women were going on to the labour market in their mid to late 30s, and they were going to stay there, on a part-time or full-time basis, for 20 years or more. There they were in a society which promised them equality, which said they were equal, but which gave them a grim taste of the inequality of the labour market, in which two-thirds of all women were doing unskilled work for rates of pay running at two-thirds of those of the lowest paid men.

That seems to me to be the situation against which we must view our discussion of part-time work. Somehow or other we must find a social capacity to draw out the consequences of the new relationship between motherhood and work which became widely visible in the 1960s. Our failure so far to do that is why the movement for emancipation has resulted not in satisfaction but in a demand for liberation.

There are, therefore, reasons enough for the importance which your committee attached to the problem of part-time work. What I think has emerged from the debate that is relevant to what I have been saying is that there is not one cost of dealing with part-time work; there is, of course, a cost to the employer of increasing the real costs of employing part-time workers by treating them proportionally with full-time workers. But the other cost is the social cost of women workers. It is the social cost of providing half of the population, who have a very much harder life than men, with an adequate and dignified means of discharging their dual role as mothers and workers.

The committee's report undoubtedly demonstrates that there is inequality, and there is certainly, from the evidence which the committee received, a strong feeling among part-time workers and the bodies which represent them that they are being treated in accordance with a double standard of occupational morality. That, I think, is the fundamental case—albeit perhaps an academic one—for justifying the acceptance, not necessarily of the directive in the terms in which it is issued from the Commission, but of its basic principle.

7.10 p.m.

Lord Spens

My Lords, I must apologise to the House and to my noble friend Lord Seebohm for not being in the Chamber at the very beginning of his speech. I wonder whether he dealt with what I consider to be the most misleading title of this debate. When I looked at it yesterday morning I thought that it related to meals-on-wheels, social services visits, and that kind of thing. It was only after a fortuitous meeting that I discovered otherwise. As I was walking along the Embankment yesterday morning coming to the House I met a member of the staff of the Institute of Directors, and he drew my attention to what in fact the directive is really about, which is how to deal with all part-time workers in paid employment. I am quite certain that quite a number of other Members of your Lordships' House were under a similar misunderstanding. I know at least one noble Lord on the Benches opposite, with whom I talked today, who had not realised the implications of the debate, and I am quite certain that he would have taken part in it had he known them. So I complain that the debate's title, relating to voluntary part-time workers, has been extraordinarily misleading to us; in particular to those of us on the Cross-Benches who do not have the staff to support our researches.

Having said that, I want to say that I am not an academic and am rather astounded at the way that the academics whom we have heard so far seem to have neglected what I think is the most important, the greatest, priority that we must look at today, which is the huge figure of unemployment in the country. With great respect to the noble Lord, Lord McGregor of Durris, I would say, yes, in a good world where there is plenty of employment I would entirely agree with what he had said. But when we are trying to reduce the enormous figure of 3½ million unemployed, or whatever it is—it might be less today, under the new counting system—even to think of entering into, or supporting, a directive such as this is, to my mind, quite astonishing. Therefore, I say that I support entirely the speech of my noble kinsman on the Front Bench and the speech of the noble Lord, Lord Boardman. They have looked at the problem with realism—which is very different from the academic point of view.

By listening to the noble Lord, Lord McGregor of Durris, I was very tempted to follow the theme that I have pursued more than once in your Lordships' House about married women and about how better it would be if we could persuade them not to stay in full-time employment. But I say to the noble Baroness, Lady Lockwood, that I do not propose to follow that theme this evening. No, my Lords, my theme is that of the problem of small businesses. The report itself states, in the introduction, at the top of page xii: The evidence received suggests that a high percentage of part-time employees work in small firms. It also appears that small firms have an above average proportion of part-time employees". I emphasise small firms—not Barclays, not Sainsbury's, not the public services—which at the moment offer the only hope of quickly providing more jobs; unless the Government can be persuaded to follow some of the recommendations of the Select Committee on long-term remedies for unemployment. I would say to the noble Lord, Lord McCarthy, that one of his recommendations could be implemented very easily and fairly cheaply so as now to bring about a certain reduction in unemployment.

But apart from that, it is only the small firms that will produce the extra jobs, and if they are to do that, they must not be encumbered with the disincentives that appear in the scheme that we are considering. Small firms cannot be expected to apply the Employment Protection Acts of the last decade in the way that large firms can apply them, in particular with regard to redundancy payments, maternity pay, and so forth. If they are expected to do that—-and the draft directive would seem to imply that they should be compelled to do it—not only will they fail to expand, but very likely they will even lay off some of their present employees; and that is something that we must avoid at all costs.

The decade of the 1970s was the decade of employment protection, and I do not think that it is fortuitous—I believe that here I am following the noble Lord, Lord Boardman—when I say that that decade has shown an enormous increase in unemployment. I agree entirely with the noble Lord, Lord Boardman, that the Employment Protection Acts of 1975 and 1978 are very much to blame for that. Luckily, in their Employment Act 1980 the present Government reduced the effect that the earlier Acts had on very small businesses—businesses with fewer than 20 employees. Personally, I should like to see the maximum limit raised to nearer 50 employees. But it would seem that if implemented, the draft directive would compel the Government to do away with that small relief, which I do not think can be contemplated with relish by any small employer.

So I feel that the Government are quite right to state their objections to the directive. Let them amend the directive so that it affects the Barclays and the Sainsburys of this world. That is all right; they can cope. And as the noble Baroness, Lady Seear, said, there could even be amendments to help the worksharing which is now being developed. But I hope the Government will stand firm in not allowing such a directive to be applied to the small firms in our country.

7.20 p.m.

Baroness Lockwood

My Lords, I should like to welcome the report and to thank the noble Lord, Lord Seebohm, and the members of his committee for the very detailed way in which they approached their task. I agree with their broad conclusions, and I also agree with some of their recommendations on the tightening up on some of the draft articles in the directive. I have a reservation. I would go even further than they do when they enter doubts that this particular draft directive may not provide a workable balance for us in this country. I would suggest that it does provide a workable balance.

When I read the report and the evidence that had been submitted, I wondered on occasions whether there was not some confusion about the purpose of such a directive and the purpose of some of the articles included in the draft. I must also confess that, listening to the noble Lord, Lord Glenarthur, I had to wonder whether or not there was not some confusion in his mind about the purpose of the directive. He talked about regulations. A draft directive or a directive does not impose regulations. As the noble Baroness, Lady Seear, said, a directive is intended to set out a general purpose and general principles, and then it is left to individual countries to adapt those principles to their own institutions and statutory provisions. As I read the draft directive, I thought it had taken aboard this approach with some sensitivity.

As I looked at the evidence, too, on a number of occasions I wondered whether there was some misunderstanding about the growth behind part-time employment during the past two decades. There have been two parallel and complementary developments taking place simultaneously. In the first place, as the noble Lord, Lord McCarthy, said, there has been a change in the structure of industry. In the manufacturing sector there has been the introduction of new methods and new machinery, and of new techniques, which have required a growth in the shift system. In the service sector there has in itself been a tremendous growth, but there has also been a growth in jobs requiring less than a normal full day's work. In other words, this growth and this change in industry has produced its own specification, and that is a specification for part-time work.

Economic reasons, and all the reasons that the noble Lord, Lord Spens, has been referring to, may bring about a decrease in the demand for labour, both full-time and part-time. But I think it is a fact that improving conditions of part-time workers will not in itself necessarily reduce demand for part-time workers. I think it was the noble lord, Lord Allen of Abbeydale, who said that it would really be a very expensive exchange if we were to replace a person who was doing a part-time job with a person who was available full-time.

The second development that there has been, as the noble Lord, Lord McGregor of Durris, has said, is the emergence of a hidden resource; in other words, married women seeking to return to the labour market. It we look at some of the factors surrounding this return of married women to the labour market, we find a number of pointers. Currently, almost by definition, part-time work means married women workers. The report says—and some noble Lords have referred to this fact—that 84 per cent. of part-time workers are women. If we look at those workers between the ages of 16 and 59, or 16 and 64, whose main employment is part-time, then we find that of this group 95 per cent. are women. This is 95 per cent. of part-time workers whose main work is part-time; not those who are doing peripheral work, perhaps an extra job in the evening. The statistics show that these women are most frequently working between 17 and 24 hours per week.

The second factor is the demographic factor: that part-time employment for women is the time when they have had their children and they are seeking to return to the labour market. Of all the women working part-time at the present time, all but 7 per cent. have had at least one break in their employment pattern for child-rearing. Therefore, we can say that part-time work is related to family formation. If we look at the statistics, we find that 47 per cent. of part-time workers are women with children between 5 and 9 years old. If we look at the number of married women with no dependent children, we find that 42 per cent. of them are working full-time. Therefore, there is this pattern emerging of married women using part-time employment as an intermediary in their full-time employment pattern—full-time before having their children, then part-time and then full-time again. This is particularly so of the current generation of young mothers.

I would suggest that there is a need—a social need and a very real need—to protect the employment of these women, and to help them build up their pension rights. In this House we are fully aware of the difficulties in relation to marriage breakdown these days. It is a fact that the lifestyles of most families are now based on two incomes. This means two incomes in times of employment and two incomes in times of retirement. Therefore, it is important to ensure that this period of part-time employment for married women is an integral part of their employment pattern, and that it does not prejudice their opportunities for protection in their own right and their opportunities for earning a pension in their own right.

The third factor is, as the noble Lord, Lord McCarthy, and the noble Baroness, Lady Seear, have said, that part-time work is associated with low pay. One of the objectives of the directive—and the directive is part of a package that is coming out of Europe—is to encourage other groups to come into the category of part-time employment. Other groups will be encouraged into this category only if the provisions are right. Therefore, I suggest that the development of part-time work underlines two needs: the first is to open up more opportunities for part-time work in more highly skilled areas. Many of the women who are working part-time are now having to work at a level below their skills and training because part-time employment is not available in the high levels. I hope that in looking at job sharing schemes we can concentrate on this aspect of providing part-time employment in other areas and in other levels of jobs.

The second need is to recognise the significance of part-time employment in the labour force. When we are talking about 20 per cent. of the labour force who are in part-time employment, we are not talking about an insignificant sector. The Employment Protection Act to some extent helped to recognise this significance. The draft directive would take us further. The draft directive that we are considering is not something which is going to apply to this country only; it is of course something that would apply to the whole of the Community.

Those who gave evidence and said that there was no indication of discrimination against part-time employees—and I include the Minister in this category because he said it, too—I suggest are ignoring the facts of the situation: the statistical evidence that is available and the case law under the Sex Discrimination Act and the Equal Pay Act. On two important aspects they have shown that there is unlawful discrimination against part-time workers. I regret very much that the Government have taken the attitude that they have towards this directive. I suggest to them that by changing the method of collecting and collating statistics we are not going to change the facts. The facts of the situation are that there is still this reserve of labour, these married women who, even if they are not included in the unemployment statistics, are still there.

The noble Lord, Lord Spens, said that the most important job was to solve the unemployment problem. These married women, the part-time workers, are part of that unemployment problem. If we pretend that they are not there, we are hiding our heads in the sand. Incidentally, we are, of course, adding to the cost of family income supplement and supplementary benefits because where these women cannot get employment the families might have to resort to these benefits.

The Government have recently introduced a job splitting scheme. That would have been an excellent opportunity for us to take on board the principles in the draft directive. I very much regret that the job splitting scheme has made no concessions at all to the status of part-time employment. It has not in any way tried to enhance the status of part-time employment. Indeed, it could prejudice the protection of those people under the Employment Protection Act if they move into job splitting schemes. It certainly could complicate pension arrangements. As the noble Baroness, Lady Seear, said, we are not going to encourage men into part-time employment or into job splitting schemes unless their pension arrangements are safeguarded. Of course, the new job splitting schemes totally exclude those married women who have been shown to be in the greatest need of part-time employment.

I suggest that instead of taking advantage of an opportunity to recognise the principles in the draft directive and link them with the job splitting proposals, we seem to have gone in the opposite direction. For all these reasons, I hope that the Government will look very seriously at the report from the Select Committee and see whether they can add their weight to the introduction of such a directive in Europe.

7.36 p.m.

Viscount Hanworth

My Lords, I want to deal with only one aspect of the subject under discussion tonight. It is the importance of providing greater opportunities for part-time work for qualified married women. I stress the word "qualified". I raised this matter in a Wednesday debate about 10 years ago, and fortunately I was able to combine the Motion with one proposed by the noble Lord, Lord Shackleton, who was then a senior Minister. After the debate he very greatly improved the conditions for married women working in the Civil Service. Although I had the full support of noble Baronesses in the House, I never subsequently managed to get any real interest from the industrial Peers and to make some impact in their field. Later, with unemployment rising, the climate was much less propitious, and I am afraid that I did not continue the campaign.

Apart from a few women who put a career beyond any other considerations, most will I think agree that if they start a family there is a period when they cannot and should not work at all; then there is a time when they could work part-time, followed, if they so wish, by a return to a full-time career. If we do not accept this, we are losing a high proportion of those who have been given expensive training at university—and I include some of our most able citizens. The same of course applies to other skilled persons.

However, there is much more to this matter. Many women are better wives and mothers if they have work and interests outside the home and can use their abilities. There have been too many changes in their absence from work to make it easy to return unless they can get part-time work quickly as soon as they can work at all. There is, however, another aspect to the usefulness of part-time working. With motivation, almost as much can be achieved in four hours as it can in eight. It used to be said that part-time teaching or nursing was impossible; but later it was accepted. Part-time research was unthinkable. If this is true, most university professors and lecturers are ineffective researchers. One can easily go on with the list. For example, what about a really able part-time secretary working in the morning and one less able working in the afternoon? Then the chances of having no secretary at one time are very much reduced.

I know that the noble Lord, Lord Spens, thinks that with unemployment as it is, a woman's place is in the home; but let us look for a moment at the statistics. There are now over 4 million part-time workers in Britain, 83 per cent. of whom are women; and the general trend is increasing. I am sure we cannot possibly discriminate against this. In fact, by accepting at least some of the EEC recommendations and improving conditions for part-time work, it could well be that more full-time workers would decide in favour of part-time work; and this of course would help the unemployment situation. Moreover, if it costs the Government in all something like £5,000 a year when a person is unemployed, they could in some areas gain the benefit of improved service and still have something in hand by introducing a quota of part-time workers. Teachers are a case in point, because smaller classes are desirable and there would be little or no added infrastructure such as larger buildings or the purchase of materials involved. That would seem to be one answer to getting more people working usefully at no cost to the Exchequer.

7.41 p.m.

Lord Glenarthur

My Lords, with the leave of the House, perhaps I may answer some of the questions which have been raised in the debate, which I think has been a very interesting one. Many very sound remarks have been made, although I am afraid I cannot promise that the Government will necessarily change their minds in the light of what has been said. However, I am quite certain that my right honourable friend will take note of all the points that have been raised.

The noble Lord, Lord Seebohm, referred to other member states and their attitudes to the directive, and it might be helpful if I tell him that I think perhaps he was slightly out of date in that at least three or four other countries share the United Kingdom's reservations about the proposals: they are, Germany, Denmark, Holland and, to some extent, Ireland. The noble Lord also talked, as did others, about the job-splitting scheme. I will talk a little more about that later; but of course that scheme is aimed at encouraging more part-time work and is fully consistent with the Government's policy.

The Government are against the directive because they believe it will reduce the opportunities for part-time work. It is as simple as that, and I think the Government have been supported in a very helpful way by my noble friend Lord Boardman and by the noble Lord, Lord Spens, in this regard. The noble Baroness, Lady Seear, and the noble Lord, Lord Allen, indicated that there was some inconsistency in what I have said. There is, my Lords, little evidence of unjust equal treatment of part-timers. The directive seeks to give proportionate treatment in all circumstances, regardless of commercial and economic considerations. The Government believe that this will lead, again, to less part-time work being made available.

The noble Lord, Lord McCarthy, in his usual eloquent way, tackled the Government on the six "legs" by which he claimed we did not agree with the directive. So far as discrimination is concerned, the Government do not claim that there is no unjust discrimination but they feel that the effect of the directive would be to tip the balance too far in favour of employee protection, to the detriment of part-time work.

There have been many arguments advocated this evening about the need for further protection of part-time workers. In respect of the unemployment situation, the Government believe that part-time workers should have broadly the same rights to protection as other workers. However, we also believe that before acquiring rights, employees need to show a reasonable level of commitment, and there is therefore a minimum hours qualification. One form of protection that part-time workers could avail themselves of is membership of a trade union, and at the present time only one in four or five part-time workers belong to trade unions. That is perhaps a question more for others than for me but, so far as I am aware, there is no bar to part-timers joining a union and I assume that their opportunities in the union are no less than those of full-timers. Protection through membership of a trade union is therefore a matter for personal choice and there is no role for the Government in it.

So far as the cost to employers is concerned, which was another of the points raised by the noble Lord, the Government most certainly did consult with the TUC and have seen evidence from individual employers. It is apparent that the directive would impose the greatest cuts on small employers, as was well demonstrated in the speech of the noble Lord, Lord Spens. As the noble Lord said, it is in the area of small businesses that the greatest potential in the economy exists.

The noble Lord, Lord Allen, referred to the "insurance trap", which is referred to on page 125 of the report. What I should like to do is to draw the attention of my right honourable friend in the Department of Health and Social Security to the points that he made. So far as occupational schemes are concerned, perhaps I might say that the draft directive, as laid before Parliament, would give part-timers greater rights to access to occupational pension schemes than full-time workers. It would oblige employers to admit part-timers to their schemes even in circumstances where full-time workers are excluded, irrespective of their age, health, length of service and so on. This is unacceptable in principle. The aim, we believe, must surely be to give equal, but not better, rights.

Lord Allen of Abbeydale

My Lords, I am sorry: I did not wish to interrupt the noble Lord, but that was precisely the point I made. I said that the draft as at present drawn was unacceptable and that it ought to be amended to ensure that part-time people were given the same right proportionately, but no better right.

Lord Glenarthur

My Lords, I am grateful to the noble Lord for what he has said and for agreeing with that particular part of what I have said. The Department of Health and Social Security have considered also the feasibility of having no threshold for the national insurance scheme, with a sliding scale of contributions based on earnings and hours worked, which was another point which was raised. My right honourable friend would be against such a proposal on the grounds of both principle and practicality in this case.

On the question of principle, the Department of Health and Social Security have a lower earnings limit which is set at the same level as the basic retirement pension so as to ensure that those with minimal earnings do not have to pay contributions. If there was a liability to pay contributions on any earnings, very small sums would become due. That would mean that the Department of Health and Social Security would have to introduce some system of pro rata benefits—those paying a small contribution receive a flat rate benefit at a higher level than their normal weekly pay and at a disproportionate amount to the contributions they have paid. This system, without expanding on it at any great length, would lead to a number of practical difficulties.

The noble Baroness, Lady Lockwood, and the noble Baroness, Lady Seear, and others, talked about, in particular, women. Women do have considerable protection already in their work both under the Equal Pay and Sex Discrimination Acts and also—and the noble Baroness referred to this—in the maternity provisions of the Employment Protection Act. These provisions go a long way to putting women in employment on the same basis as men. As your Lordships will know, the Equal Pay Act is shortly to be amended. Part-timers have, and will have, exactly the same rights under the Equal Pay Act as full-timers. They can claim equal pay with a part-time or full-time named comparator of the opposite sex, before an industrial tribunal. Therefore, in principle, there is no reason why women should be unjustly discriminated against when working part-time. Indeed, part-time work, with its intrinsic flexibility, often suits women with their family responsibilities, to which, of course, the noble Baroness referred.

The noble Baroness, Lady Lockwood, also asked specifically about the regulations and what they impose upon the Government. An EEC directive has to be implemented exactly in domestic legislation, except where discretion is specifically given to member states to adapt individual provisions to their own legislation. Perhaps I may draw her attention to Article 10, which specifically states that, Member States shall implement the laws, regulations and administrative provisions necessary to comply with this directive not later than 1st January, 1984, and shall notify them to the Commission without delay", and, Member States shall communicate to the Commission the texts of the laws, regulations and administrative provisions which they adopt in the field covered by the directive"—

Baroness Lockwood

My Lords, if I may say so, I was drawing a distinction between a regulation and a directive—a regulation which applies throughout the Community and a directive which leaves it up to the individual Governments to introduce their own domestic legislation, in order to comply with the principles in the directive. I do not think that that conflicts with what the noble Lord has just read out.

Lord Glenarthur

My Lords, I am grateful to the noble Baroness. As I understand it, regulations would be needed and they would follow on from the directive. We could not be very wide of the mark in the way in which we implemented the directive in our own legislation.

The noble Baroness also referred to the job splitting scheme. As she will know, the Government have decided to introduce the scheme. It is an important new scheme to increase job opportunities for the unemployed by offering them part-time jobs. There is no restriction on age, as the noble Baroness, Lady Seear, suggested. As well as reducing unemployment, the scheme should offer participants valuable work experience and training. It should also ensure a better use of public money through the payment of grants to cover the cost to employers, rather than payments to the unemployed.

Concern has been expressed about setting a minimum of 30 hours to be worked in a fortnight. It is not correct that employers are being encouraged to avoid employing those who would qualify for rights under the employment protection legislation. The 30 hours is a minimum only and, in any case, all participants will have their attention drawn to a leaflet setting out the potential effects of their legislative rights. The noble Baroness also asked about the scheme confining benefits in respect of sex discrimination. There is only one reason for restricting the scheme to benefit recipients; that is, the need to make the scheme self-financing. There is no sex discrimination. Women who are eligible will be as welcome as men.

I hope that that covers many of the points that have been raised. No doubt there are many that I have not answered, but I do not wish to detain the House for much longer. The noble Lord, Lord McCarthy, talked about the need to create jobs and this is, of course, paramount. So far as possible, we are all determined to reduce the level of unemployment. But it is industry which is in a very good position to judge exactly what the effects of this directive are likely to be.

I do not think I shall weary the House by producing any more quotations from letters or evidence that have been submitted to this committee or to the Department of Employment, but the Confederation of British Industry, the CBI Small Firms Council, the Association of Independent Businesses and others clearly indicate that the directive would not encourage employers to employ part-time workers, because of additional costs and so on. My noble friend Lord Boardman made the point much more cogently than I can.

I have no hesitation in saying that of course my right honourable friend will take note of what has been said tonight in what has been a very good debate. However, I am afraid I cannot promise that he is likely to change his mind, or that the Government will be able to accept the directive, any more than I have been able to indicate that they have been able to accept it so far.

Lord McCarthy

My Lords, the noble Lord made an extremely important statement on behalf of the Government, and I want to make absolutely certain that I have got it right. As I understand it, he said that there was some unjust discrimination, whereas the Secretary of State for Employment, in his letter to the committee, stated on page 131: There is no clear evidence that part-time workers are being unjustly treated". Is it now being said that the Secretary of State is wrong, has changed his mind, and that part-time workers are being unjustly treated? If they are, would it not be sensible for the Government to do what this report suggests; namely, to go for detailed amendments and not for the thing which sets us out from every other country in Western Europe—total opposition?

Lord Glenarthur

My Lords, there is, no doubt, a small measure of discrimination, yes. I do not think my right honourable friend would deny that for a moment. But I am certain that when he has read what the noble Lord, Lord McCarthy, has said, he will bear in mind his views and the views of other Members of your Lordships' House.

7.58 p.m.

Lord Seebohm

My Lords, we have had a very interesting debate indeed, and it would be quite improper for me to start another speech at this time of night, although I could blow a number of holes in a number of things said by the noble Lord the Minister. I hope that he will read the Official Report carefully tomorrow; in particular, the speech of the noble Lord, Lord Allen of Abbeydale. The noble Lord completely misinterpreted at least two things that he said, which I shall not go into now, on the pension and insurance side, both of which I think he got wrong.

I was rather surprised that the word "threshold" was practically never mentioned by anybody. We state in our report that we hope that the directive, when it comes forward, will leave the various member countries free to set their own threshold. This could, probably—it depends on where it is fixed—help to solve a lot of the problems which were referred to by the noble Lord, Lord Spens.

The other point I want to make is that I do not think the noble Lord, Lord Boardman, helps his case by sneering at academics. I saw the noble Lord, Lord Killearn, here during most of the debate. He was on my committee and he will, no doubt, be as pleased as I am to be called an academic, but I do not think we have that intelligence. We have only one academic here today who was on our committee, and I thought that the contribution made by the noble Lord, Lord McGregor, was very splendid indeed. His background to the report gave us very strong support.

I shall end by simply asking two questions—apart from thanking everybody who joined in the debate. Why should 4. 3 million people be so disadvantaged, in comparison with the rest of the workforce, just because they cannot work full-time? Surely what we are proposing is an inevitable progress for a new, logical—and I repeat, "logical"—and efficient employment system.

Motion, by leave, withdrawn.