HL Deb 29 October 1985 vol 467 cc1449-50

2.50 p.m.

Lord Rochester

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they agree with the recommendation of the Select Committee on Overseas Trade that pay settlements in British industry must have regard to the competitiveness of the manufactures which are produced; and if so whether they will initiate discussions to that end.

The Secretary of State for Employment (Lord Young of Graffham)

My Lords, pay is a matter for negotiation between employees and employers. The Government have made it very clear, and will continue to make it clear, that excessive pay settlements mean fewer jobs and damage competitiveness. We will continue to do so. All those who care about employment and competitiveness should do the same.

Lord Rochester

My Lords, would it not be in the Government's own interest to try to obtain through a forum such as the National Economic Development Council a greater public awareness of the effects which more competitive unit labour costs could have on prices, investment, productivity and, above all, employment?

Lord Young of Graffham

My Lords, yes. The CBI, Government Ministers and, I suspect, from time to time, those within the council of Neddy try to make clear that the essential element in our position in the world today is our unit costs. It is a combination of wage levels and productivity. On that depends the future growth of industry in this country.

Lord Dean of Beswick

My Lords, may I ask the noble Lord the Minister if he will join with me in disabusing people of the idea that the wage rates paid in British manufacturing industry are a major factor at present in losing orders, bearing in mind that we have some of the lowest rates of pay within the EC and that wage rates among most of our major competitors in Europe over the last five years have risen far faster than they have in this country?

Lord Young of Graffham

My Lords, my concern is with unit costs. And, last year, I am afraid to have to say, unit costs in this country went up by 5 per cent., while unit costs in Germany went down by 3 per cent. and in Japan by nearly 6 per cent. It is not the level of pay that counts; it is the level of unit costs.

Lord Bruce of Donington

My Lords, is the noble Lord aware that there is an additional factor in the make-up of unit costs aside from the cost of labour? It also depends, as the noble Lord may know, on the quality of the machines that are worked by labour. Unit costs are a product of that. Is the noble Lord aware of that? Is the noble Lord further aware that, if he is to address any recommendations about pay to the managers of British industry, he should inform them that example is a very good thing and that managers' pay, as reported in the press, has risen by 17 per cent. during the last year? Will he remind them that leadership requires that an example should be given?

Lord Young of Graffham

My Lords, I should like to commend to your Lordships' House the report of your Select Committee on Overseas Trade, which says: pay settlements in manufacturing must have regard to the cost competitiveness of the manufactures which are produced. These criteria must influence the pay settlements of shopfloor and all ranks of management alike". I will not dissent from that.

Lord Ezra

My Lords, will the noble Lord not agree that a clear commitment by Government to the regeneration of manufacturing industry would go a long way to deal with the issue raised by my noble friend?

Lord Young of Graffham

My Lords, I would prefer a clear commitment from all parties concerned in manufacturing industry to that aim.