HL Deb 07 May 1991 vol 528 cc975-6

Lord Boyd-Carpenter asked Her Majesty's Government:

What has been the average increase in wage rates in the public and private sectors of the economy respectively in the last year; and what are the comparative figures for Germany and Japan.

The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater)

My Lords, the new earnings survey estimates that in the year to April 1990, the increase in weekly earnings was 8.9 per cent. in the public sector and 10.1 per cent. in the private sector. Comparative figures for Germany and Japan are not available across the public and private sectors. However, the latest available figures for earnings in manufacturing show an annual increase of 8.75 per cent. in Great Britain compared with 5.7 per cent. in the former Federal Republic of Germany and 4.1 per cent. in Japan.

Lord Boyd-Carpenter

My Lords, I thank my noble friend for that most informative Answer. Does it not follow that if we are to restore our balance of payments situation and check the rise in unemployment it is necessary to impose very strict control over increases in earnings in this country?

Viscount Ullswater

My Lords, pay is a matter for employers and employees to determine. They must bear in mind the long-term consequences of their decisions on competitiveness, investment and jobs.

Lord Molloy

My Lords, does the noble Viscount agree that the proposal of the noble Lord, Lord Boyd-Carpenter, might be helped if the Government stopped deliberately sending the cost of living soaring, particularly for old people? I have in mind the recent increase in VAT and other measures. Such increases sometimes compel employees to submit wage claims to pay the increased bills which they receive.

Viscount Ullswater

My Lords, at the moment the rate of inflation is dropping, and dropping fast. That will benefit not only old age pensioners but everyone in the community.

Lord Marsh

My Lords, does not the noble Viscount agree that every attempt by government at long-term control of wage and price movements in this country has been an unmitigated disaster?

Viscount Ullswater

My Lords, I have a certain sympathy for that argument. I see no room for the Government to interfere again.

Lord Grimond

My Lords, can the Minister give comparable figures for the increase in directors' salaries? Does he not agree that restraint on wage claims, for which the noble Lord, Lord Boyd-Carpenter, rightly asks, must start at the top? Some lead must be given by those at the top of industry and elsewhere. They must not take large increases regardless of the cost of living.

Viscount Ullswater

My Lords, the same remarks as regards wage increases can apply to all sectors of the economy whether they be increases for directors or people working in lower capacities. However, it is a fact that many companies rely on board compensation committees, including their non-executive directors, to determine the right link between top management pay and company performance.

Baroness Turner of Camden

My Lords, does the Minister agree that a number of the reported wage settlements, particularly the one reported today, are linked to greater flexibility in operations? Does this not contribute to greater productivity, as desired by the Government? For example, is he not aware that in Germany I.G. Metall has recently negotiated a deal which is several points above the rate of inflation in Germany?

Viscount Ullswater

My Lords, the noble Baroness has put her finger on a most important point—productivity. However, if unit wage costs increase, that bears down on the competitiveness of the industry.

Lord Boyd-Carpenter

My Lords, can one take it from my noble friend's answers that in the area where they have control—the public sector—the Government will exercise control, bearing very much in mind the considerations that he has just mentioned?

Viscount Ullswater

Yes, my Lords. The Government are slightly bound by pay review bodies, formulas and such like which are affected by the settlements in the private sector. However, where they can, the Government exercise that control.

Back to