Manufacturing: Employment Statistics (Hansard, 5 February 1992)

§ The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater)
My Lords, the number of employees in employment in 263 manufacturing industries in the United Kingdom was 5,215,000 in September 1989, 5,147,000 in September 1990 and 4,795,000 in September 1991.

§ Lord Dean of Beswick
My Lords, I am grateful to the Minister for those detailed figures. They update information that I received from him in answer to a Question on the subject before Christmas. Is the Minister aware that those detailed figures indicate that between November 1989 and November 1990 there was a loss of 94,000 jobs in manufacturing, and that between November 1990 and November 1991 the figure was 354,000? That is an increase in job losses of a quarter of a million on the previous 12 months. In percentage terms, it is an acceleration of 400 per cent. in 12 months. The Minister will be aware that the CBI issued a report last week which indicated that it expects another 70,000 jobs to be lost in the first quarter of this year. Can the Minister give us any hope as to when this damaging and disappointing trend in job losses in our most vital sector will end and the tide will turn the other way to the advantage of all?

§ Viscount Ullswater
My Lords, I entirely agree with the noble Lord that it is a vital sector of the economy. However, I have also said to him in the past that the decline in manufacturing employment is a long established trend. The employment peaked as far back as 1966. In my past replies, I have also indicated that the fall is exaggerated by reclassification of some of the jobs into the service sector. As I have said to the noble Lord before, the most important factor is that since 1981 manufacturing has consistently accounted for just under one quarter of total output, the same as in other developed countries such as France and the United States.

§ Baroness Turner of Camden
My Lords, what steps do the Government intend to take to ensure that the highly skilled workforce currently employed in the defence industries will have alternative employment as the industries gradually run down, or will those people simply join the statistics of others formerly employed in manufacturing industry who are now unemployed?

§ Viscount Ullswater
My Lords, history will relate that those who have the skills —and those coming out of the defence industries are highly skilled—have not found it difficult to find other jobs in industry. However, the employment service is in place. The Government have a great many opportunities for reskilling people, and assisting people back into the job market when the upturn in the economy comes.

§ Viscount Caldecote
My Lords, does my noble friend agree that the first priority is increased output in the manufacturing industry through higher productivity? Only in that way will more jobs be created in the supporting industries.

§ Viscount Ullswater
My Lords, yes. I am happy to agree with my noble friend. Manufacturing productivity growth in the United Kingdom since 1979 has been very impressive. It has grown by an average of 3.6 per 264 cent. a year. That is the fastest of the major industrialised countries. In the 1960s and 1970s the United Kingdom was bottom of the league table.

Lord Bruce of Donington
My Lords, does the noble Viscount agree that the figures that he has given today and the observations that he has made ought to be considered within the context of the Government's record, not since 1981, but since 1979? Is he aware that unemployment in the manufacturing industry during that period of time to date has increased by 2.5 million? Over the period that the Conservative Party has been in office, that works out on average at 34 more unemployed every hour.

§ Viscount Ullswater
My Lords, the noble Lord appears to be indicating that the jobs lost in manufacturing have not been replaced elsewhere. He is wrong. I understand that he was active in the previous Labour Government. Therefore he should remember then that output in manufacturing fell, that there was no increase in profitability and that there was no growth in exports. I am glad to say that during this Government's tenure there has been an increase in output, an increase in productivity and a massive increase in manufactured exports.

Lord Morris
My Lords, does my noble friend agree that we should rejoice in these figures because they demonstrate clearly that progress in the modernisation of the manufacturing process is indicated by the fact that it now has a higher per capita cost rather than being labour intensive?

§ Viscount Ullswater
My Lords, yes, I agree with my noble friend to a certain extent. Obviously we are all concerned to find work for those who have lost jobs in the manufacturing industries. It is important for manufacturing to take account of the level of the increase in earnings. At the moment it is high in the league table, at some 8 per cent. in November, whereas for our major competitors in the United States and Japan it is at about 3 per cent. However, unit wage costs are rising less fast than those of our major competitors.

§ Lord Molloy
My Lords, is the Minister really saying that the Government find satisfaction each time that the unemployment figures increase by half a million because that might help to reduce inflation and therefore it is good?

§ Viscount Ullswater
My Lords, no, of course I was not saying that. I was indicating to the noble Lord's noble friend and to my noble friend that the fall in the number of jobs in manufacturing should not be seen in isolation. Compared with France and Italy, two countries which have relatively the same number of people working, this country has more people in the production and construction industries.

§ Lord Marsh
My Lords, does the Minister agree that if governments had not tried unsuccessfully to distort the market, the rundown in some of the traditional smokestack industries might well have 265 been less damaging to the economy and more humane to the labour force because it would have been a consistent contraction?

§ Viscount Ullswater
My Lords, I believe that is the theory and perhaps I should not comment upon it. However, I believe that our regional policy has been immensely successful in replacing industry in the North which has come to the end of its life. That has been demonstrated by the unemployment figures, which have risen not nearly as fast in the North as in the South.

§ Lord Stoddart of Swindon
My Lords, the Minister has painted a pretty picture of the economy in his replies. However, is it not a fact that last year industrial production and gross domestic product fell by 2.5 per cent.? Surely he will agree that that is not exactly a rosy picture. Is he aware that one of the reasons for the lack of further large investment in manufacturing industry is that real interest rates are at an all time high? When will the Government act to lower interest rates at an early date?

§ Viscount Ullswater
My Lords, the Government will act to lower interest rates at the earliest possible minute. The noble Lord is trying to deny that the United Kingdom's share of world trade, for instance, will have grown for the third year in succession. That is a great success. During the year to the final quarter of last year the volume of exports grew by 4 per cent. and were at their highest level in December. There are many highlights in the United Kingdom's trade performance; for instance, we are now a net exporter of television sets and the deficit in passenger motor cars has fallen from £5 billion in 1989 to just below £1.5 billion in 1991. Having listened to the investment plans of the Japanese manufacturers such as Nissan, Honda and Toyota, I expect great improvements to be made in the 1990s.

§ Lord Dean of Beswick
My Lords, the Government's figures for the latest complete month, November, showed a job loss of 21,000. That monthly loss equates with the predictions of the CBI report that I mentioned—that in the foreseeable future just over 20,000 jobs a month will be lost. In its report the CBI makes no reference whatever to different categories. It is talking about hard-nosed engineering, manufacturing and chemical jobs. It is not talking about redesignation. Is the Minister not relying too much on the fact that some jobs have been reclassified in order to justify what I call disappointing figures?

§ Viscount Ullswater
My Lords, no. I am demonstrating only that the manufacturing sector remains at just below one quarter of total output and has remained so for 10 years.