Fair Wages: Denunciation of ILO Convention (Hansard, 21 October 1982)

§ Lord Davies of Leek
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what benefits they expect will accrue to our economy now that they intend to proceed with plans to abolish the Fair Wages Resolution; and whether the International Labour Organisation has been notified of this intention to denounce the ILO Convention Number 94; and further when Parliament will be given an opportunity to debate this.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers)
My Lords, industry and the economy will benefit by the removal of unnecessary and outdated constraints on the ability for people to reach settlements as a result of free negotiation on terms which suit their own circumstances. A Motion to rescind the resolution is to be put before another place in the next Session. Denunciation of ILO Convention No. 94 was notified to the International Labour Office on 20th September, 1982.

§ Lord Davies of Leek
My Lords, is the noble Earl aware that this issue of the International Labour Organisation on fair wages is of paramount importance internationally on contracts? It has been in existence in this form for 35 years. Is he further aware that efforts to get fair wages goes back 91 years and that the ILO was awarded the Nobel Prize for its efforts to get friendly relationships on the industrial front throughout Europe? We have now broken or intend to break this convention. The answers were fudged, inosculated and brought in quietly by means of Written Questions in the other place and here.
Finally, and then I shall sit down, when I asked the noble Lord opposite about fair wages I was partly told I did not know what I was talking about. I had already read Hansard, which he had not. There was a Written Answer, and I can give the dates. It is of importance—

Several noble Lords
Question!

§ Lord Davies of Leek
Give me an introduction.

Several noble Lords
Order!

§ The Lord Privy Seal (Baroness Young)
My Lords, I think the whole House realises that the noble Lord, Lord Davies of Leek, feels strongly about this matter. Could he just frame his question and ask it briefly?

§ Lord Davies of Leek
My Lords, every question has been framed with the question mark at the end. I read a piece in the newspaper about this when the other place had already discussed it. Will the Minister tell the House when the Government are to allow a debate on this issue as asked in the Question?

Earl Ferrers
My Lords, I did not realise that anything that I had said had insinuated that the noble Lord, Lord Davies of Leek, did not know what he was talking about. If the noble Lord reads my original Answer I think that he will find nothing in it to lead him to construe it in that way. The noble Lord is quite right in saying that the present fair wages resolution goes back 35 years. He was not right when he said that we are breaking that convention. We have a period by which we can withdraw from the convention if we like. It comes once every 10 years. The date of our possible denunciation, which is the equivalent of withdrawal, goes from 20th September 1982 to 19th September 1983. If we give that notice of withdrawal it comes in a year later. So we are not breaking a convention.
The noble Lord asked whether I would answer the last part of his main Question. I did so when I said that a Motion to rescind the resolution is to be put before another place in the next Session. The resolution is a resolution of another place and it is for the other place to countermand that resolution; it is not a matter for this House unless the noble Lord, Lord Davies of Leek, or anyone else wishes to put down a Motion.

§ Lord Kaldor
My Lords, going back to the noble Earl's original Answer, may I ask: is he aware that a widespread and intellectually highly respectable case can be made out for the view that the obligation to pay fair wages, far from having adverse effects on the economy, has very favourable effects on efficiency? Therefore, it is quite possible that the abolition of the obligation to pay fair wages will encourage the survival of inefficient enterprises and will, therefore, act to lower our national wellbeing and not to raise it.

Earl Ferrers
My Lords, I am aware from what the noble Lord, Lord Kaldor, has said that there are people who take an opposite view from that which the Government take—I accept that. However. I should tell the noble Lord that we consider the fair wages resolution to be obsolete. It refers to employees who are on Government contracts only; it does not help the low paid; it can be disruptive to companies who are in difficulties; and it does not mean that it will help companies, because very often they are obliged to pay what is the "going rate" in the industry and that is not necessarily the lowest paid rate. Also the complaints which we have had about the fair wages resolution, or the applications, have tended to come from those in the higher, and not the lower paid industries.

§ Lord Collison
My Lords, I have listened to the explanations which have been given. However, before this decision was taken, had the Government consulted the TUC, who obviously have a great interest in this particular convention, and also, of course, the ILO with which I was connected for many, many years? If the Government did not consult the TUC, can the Minister tell me why they did not do so?

Earl Ferrers
My Lords, the Government have consulted with a number of people, of which I think the Trades Union Congress was one, and they had a variety of different responses.

§ Lord Jacques
My Lords, are we to assume that the Government wish to be free to enter into contracts with people who pay unfair wages?

Earl Ferrers
Certainly not, my Lords.

Lord Spens
My Lords, can the noble Earl the Minister tell us whether ILO Convention Number 94 has ever been ratified by the United States of America?

Earl Ferrers
No, it has not, my Lords.

Lord Bruce of Donington
My Lords, is the noble Earl aware that his right honourable friend Mr. Tebbit in another place, when delivering a breakfast-time broadcast on the Thursday of the Conservative Party Conference, answered the contention of his right honourable friend Sir Ian Gilmour that the payments to the unemployed should in fact be increased, by saying that that would cause widespread resentment among the lower paid workers, some of whom were paid below that rate? Is it, therefore, the Government's intention that wages should now be driven down to below the normal unemployment rates?

Earl Ferrers
My Lords, I find the deductions of the noble Lord, Lord Bruce of Donington, quite astonishing. There is nothing in what I have said or in the abolition of the fair wages resolution which will encourage wages to go down below the unemployment level. What the noble Lord must know, if he knows about the fair wages resolution—which I am sure he does—is that it sets a wage rate which is at the "going rate" in the industry concerned. It may oblige certain companies to go above the minimum, to pay what is the "going rate", which may well put them in financial difficulties and thereby end the company and the jobs for the employees. The purpose of this action is to allow free negotiation.

§ Lord Elwyn-Jones
My Lords, can the Minister indicate how many countries or Governments have denounced the convention, or have indicated their intention of doing so?

Earl Ferrers
My Lords, I can tell the noble and learned Lord that 55 countries have ratified the convention, which means that some 93 have not done so. Those who have not ratified it include the United States, West Germany, Japan, Australia, New Zealand, Canada. Sweden, Norway, Switzerland, Portugal, Greece, Luxembourg and the whole of the Eastern bloc.

§ Lord Elwyn-Jones
My Lords, that has not answered my question, but perhaps it does not matter.

Earl Ferrers
My Lords, if the noble and learned Lord would be kind enough to repeat his question I shall listen with even more care and see whether I can give an even better answer.

§ Lord Elwyn-Jones
My Lords, I merely asked, how many Governments have denounced the convention or announced their intention of denouncing the convention?

Earl Ferrers
My Lords, in that case my answer will be briefer. I shall find out and write and let the noble and learned Lord know.