Wages Councils (Hansard, 17 November 1983)

§ Lord Boyd-Carpenter
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Minister of State, Privy Council Office, and Minister for the Arts (The Earl of Gowrie)
My Lords, there are currently 26 wages councils. It is not possible to quantify their effects on juvenile unemployment, but if the minimum rates are set at a level that the market will not bear, there will be fewer jobs. Our obligations under International Labour Convention 26 preclude abolition of, or major change to, the wages council system before June 1986. All options will be considered the moment the Government are free to act.

§ Lord Boyd-Carpenter
My Lords, is my noble friend aware, or are the Government aware, of the harm being done to the Government's policies on wages, and in dealing with unemployment, by the activities of some of these councils? Is my noble friend aware, in particular, that the wages council for the catering industry is imposing by law an increase of 68 per cent, in wage levels generally, with a higher rate of increase in the case of those juveniles whom everybody is anxious to see getting into employment?

The Earl of Gowrie
My Lords, I wholeheartedly share my noble friend's misgivings about the wages council system. When I was the Minister responsible for wages councils I sought to take young people out of their remit. That would have required legislative change, which we were not reluctant to undertake but which would have been in default of the ILO treaty. That treaty, as I said, will come to an end in this respect in 1986.

§ Lord Rochester
My Lords, would the noble Earl agree that the pay of apprentices is fixed at too high a proportion of the adult rate, and that this has contributed to a reluctance on the part of employers to train young people for skills? Is it not desirable that as negotiating opportunities arise we should aim to move closer to the West German system, where the pay of trainees is substantially lower than adult rates?

The Earl of Gowrie
My Lords, it is very welcome to the Government to have from the Benches of the noble Lord so sensible a supplementary question in relation to market clearing prices. I wish that we could hear responses of the same kind from the Benches of the noble Lord's party in another place.

§ Lord McIntosh of Haringey
My Lords, bearing in mind the noble Earl's answer to the last supplementary question, will the Government produce some evidence to show that employers are taking on fewer apprentices because of the wage levels? All the evidence I have ever seen indicates that it is the prospect of a job at the end of the apprenticeship that counts.

The Earl of Gowrie
My Lords, the Government have very regular contact with employers, both individually and in terms of their organisations, and they have never ceased to make this representation to us.

§ Lord Orr-Ewing
My Lords, is my noble friend aware that in the catering industry there are very large numbers of part-time jobs, in particular in the summer at seaside resorts, and that almost invariably these are 1373 filled by students from overseas when they would be very welcome to British young people? Does not this situation have a totally adverse effect on the creation of jobs? If we were to pass legislation now, the moment that we got out of our commitment under the ILO treaty we might be able to bring it into effect immediately our obligation ran out, rather than then have to bring in legislation, so causing further delay.

The Earl of Gowrie
My Lords, since we are signatories to the treaty I think that it would be difficult to pre-empt what happens in June 1986, but I did say to the House that the Government would be ready to consider action the moment that we are released from our binding obligations.

§ Lord Molloy
My Lords, is the noble Earl aware that the wages councils were introduced during a very painful and shameful period of our industrial history in order to prevent child exploitation? It might well be that parts of their functions are no longer necessary and may be duplicated by bigger organisations. Will the noble Earl and the department bear in mind that many small employers still find the wages councils helpful? Bearing in mind those working men and women who have no trade union to represent them, if and when the wages councils are dispensed with, will some guidance be given to small businessmen on how to get in touch with their chambers of commerce and their sections of the CBI, and will guidance be given to the employees about contacting the trades unions that cover their industries?

The Earl of Gowrie
My Lords, I am, of course, very glad that the noble Lord, Lord Molloy, is recognising that legislation belonging to a previous era is often adverse to the prospects for employment in the present era. May I say to the noble Lord that that is a great step forward for him, I shall, of course, take note of the other points that he made.

§ Lord Boyd-Carpenter
My Lords, can my noble friend clarify one part of his Answer? Do our obligations to the ILO compel the retention until 1986 of all 26 councils, or are we enabled to abolish some of them? If not, how have we been able to make the very welcome reductions that have been made in recent years?

The Earl of Gowrie
My Lords, the Wages Councils Act 1979 allows for individual councils to be abolished where collective bargaining develops, subject to an investigation by ACAS if there are objections. As my noble friend reminds us, in recent years the system has contracted through abolitions and mergers from the level of 57 councils in 1969.

§ Lord Cledwyn of Penrhos
My Lords, is not the noble Earl grossly exaggerating the position? Can he say how many more jobs will be provided, to reduce the appalling total of three and a quarter million who are out of work, if these councils are abolished, as he wishes them to be? Will he be straightforward and agree with my noble friend Lord Molloy that the wages councils have, in their day, made an enormous contribution to the social life of this country? If we have now reached the position where they are open to 1374 criticism, is not the noble Earl exaggerating in saying that their abolition will effect some great change in the disgraceful employment situation from which this country is suffering?

The Earl of Gowrie
My Lords, as I stated in my original Answer, it is not possible to quantify the effects of wages councils on juvenile unemployment. It is simply a matter of common sense that if minimum rates are set, for historical reasons, at a level that the market will not bear, there will in consequence be fewer job opportunities available.

§ Lord Diamond
My Lords, have the Government made any estimate of the percentage by which rates fixed by the councils would fall if the councils were abolished?

The Earl of Gowrie
My Lords, that would not be at all easy to quantify. We have, of course, some indications of the effects about which the noble Lord is asking in terms of the councils which have already been wound up.

§ Lord Jenkins of Putney
My Lords, would the abolition of the councils be generally and rightly regarded as part of the Government's policy of hitting the poor for the benefit of the rich?

The Earl of Gowrie
No, my Lords.