The Labour Market: Casualisation

HL Deb 21 June 1995 vol 565 cc317-54

6.3 p.m.

Baroness Turner of Camden rose to call attention to the casualisation of the labour market, including all aspects of pay and conditions; and to move for Papers.

The noble Baroness said: My Lords, I believe that this is one of the most important debates that we have had this Session in your Lordships' House and I am very glad to have the opportunity this evening of opening it. The terms of the debate refer to the casualisation of the labour market—but in fact the debate is much wider than one simply concerned with employment, as I hope to show in the course of my remarks. I am sure that that will be followed up by some of my noble friends who are due to speak later.

Everyone now seems to accept that the days of a job for life are over. Indeed, it seems almost indecent for anyone to expect such a thing. The Government, of course, refer to this as labour flexibility. They have been instrumental, both by exhortation and through legislation, in encouraging greater flexibility, which they appear to think is good for both employers and workforces. It is felt that greater flexibility gives the workers more "choice" and it seems that the Government have women particularly in mind, since women make up a large proportion of the workforce which is in part-time employment.

Last July, the official journal of the Department of Employment, the Employment Gazette, published an interesting survey on flexible employment. Its key findings were that some 9.7 million people—38 per cent. of all UK workers—are working part-time, in temporary employment, are self-employed, or on government training schemes. That is an increase of 1.25 million since 1986. The proportion of men who are part of the flexible workforce has risen from 18 per cent. in 1981 to 27 per cent., whereas among women it has remained relatively stable.

There are, as the Employment Gazette has pointed out, a number of definitions of "flexibility". There is wages or earnings flexibility, which generally speaking involves systems like performance-related pay rather than fixed wage rates. This, with government encouragement, has been introduced practically everywhere, even in sectors where once it was unknown—in public sector enterprises, the NHS and among skilled and professional people. If anyone claims, as the Government may do, that these systems have led to greater efficiency, I must say that from my point of view I do not think that that has always been the case.

Then there is labour mobility, which describes the movement of workers to different jobs, occupations or areas according to changing economic conditions. That has been going on for a very long time, but there are plenty of reasons nowadays which render such movements simply not practicable for large numbers of workers; including, of course, the housing situation which your Lordships have just been discussing.

Then there is functional flexibility, relating to the absence of job demarcations. That used to be talked about a lot years ago and was supposed to be the main reason for the UK's poor economic performance. Well, that has long since disappeared, without the benign effects on economic performance predicted. But mostly, what we are thinking about when we talk about flexibility is what I have described in the title of the debate as "casualisation of the labour market".

Those of us who joined the workforce in the years immediately after the last war were perhaps extremely fortunate. In the main, the fear of unemployment had gone. That was something that had happened in the 1930s—to our fathers and grandfathers. We had jobs. If we lost one job, it was not too difficult to find another one. If we went into public service or one of the service industries, such as insurance or banking, as I did when I left school, we could confidently expect to stay there, if we wanted to, until retirement, when we could in many instances have earned a pension related to our final salary. I am, of course, talking fairly specifically about white-collar employment. Manual work, even skilled manual work, always tended to be less secure, although there was a fairly strong feeling among working class people, at least as far as sons were concerned, that the thing to do was to get the boy an apprenticeship in some skilled trade and that would lead to a reasonable degree of security for the future.

I need hardly say that these expectations no longer exist, either for white-collar, middle-class people or for people who would perhaps have described themselves as skilled working class. The work scene has changed very dramatically and some of the change has been positively due to government encouragement. Until 1979 or thereabouts, even Conservative Administrations accepted that the maintenance of a high level of employment—and high standards in that employment—was a basic government priority. Since 1979, however, there have been a whole series of government initiatives which have had the deliberate effect of loosening up the labour market.

There have been numbers of employment measures designed to undermine the strength of the trade union movement and therefore to rob working people of whatever collective strength they had to oppose measures being put in train which they perceived to be to their disadvantage. In addition, of course, we have had the revolution in information technology, which in an unregulated market has invariably been disadvantageous to a large section of the workforce unable to cope with it.

The Government, however, have boasted to overseas investors that if they come to Britain they will not have to recognise unions, employment protection standards are low or practically non-existent, wages are low and there is plenty of available labour because of unemployment. So, in many ways, what we see now is the result of deliberate policies.

But, as with such ideologically motivated policies, side-effects have happened which I do not think anyone, including the Government, anticipated. The result of what I believe is now known as "down-sizing" by companies—what a previous Prime Minister has described as becoming leaner and fitter—has been that a sense of gross insecurity has now begun to affect not only working-class people, who to some extent have been used to it, but white-collar employees and middle managers as well. Moreover, those who are left in work are themselves beset with anxieties and are often having to work much harder than they should in order to make up for the fact that staff numbers are being reduced.

My own union recently undertook a survey of members working in both private and public sector jobs. Forty-four per cent. of respondents working in financial services, for example, reported that they felt less secure in their jobs than they did a year ago. The survey also showed that stress is now a major problem for those in work, with 60 per cent. of the sample saying that they suffer stress as a result of not enough time to do the work they are given, poor relationships, general lack of security and so on. That survey was conducted among people working in substantial firms where there is union recognition. It is our belief that the situation is a great deal worse where the work is non-unionised and the people concerned have far less security. According to some recently published research, 44 per cent. of British workers arrive home feeling exhausted.

The new post-industrial culture, if effectively managed, could have given people more time off to use for themselves. Instead, we are seeing a great divide between those in jobs who are working themselves into the ground in order to keep them, and those without any jobs at all who are becoming increasingly subjected to pressure from the Government to comply with further requirements in order to qualify for the new jobseeker's allowance which will be less, of course, than unemployment benefit and may carry with it the obligation to take on any sort of job irrespective of rate of pay or qualifications.

In addition, there has been a large development of part-time employment and also of what I believe is known as "zero" employment where individuals commit themselves to be called in at need by a particular company and are paid when needed and not otherwise called for. I remember several years ago in this House we debated the demise of the dock labour scheme. We were unable to prevent its demise, but I well remember the debates we then had when noble Lords with experience of those times explained why the scheme had originally been introduced. I particularly remember the contribution at that time of my noble friend Lord Callaghan.

Before the last war large numbers of men would assemble at the dock gates. The boss would come out and say, "I'll have you, and you, and you, and the rest of you can go". Those not chosen had to go back miserably to their families to say there would be no money that day. It was to prevent that kind of casualisation that the dock labour scheme was first introduced. What we are now seeing is the casualisation of a large segment of the UK labour force.

Moreover, pay and conditions tend to be very poor. The wages councils have disappeared. They did at least set a minimum standard in some services and industries. According to a recent TUC survey, the lowest 10 per cent. of part-time workers, mostly women, earned only £2.49 per hour; the median was £3.98 per hour. The Government believe that many workers choose to work part-time, but often that is all the work that there is available, particularly for women. There has been a growth in the practice of hiring staff, even quite skilled, professionally qualified staff, on short-term contracts with, of course, the lack of employment rights consequent on such arrangements. In many respects, that is a rather short-sighted policy on the part of the employers who do it, since why should there be any loyalty to the company if the employer on his part does not show any commitment to the staff who have been hired?

As I said earlier, these developments had a down side, which I do not believe the Government anticipated. If people have no sense of security they will not take on long-term commitments. The former Prime Minister was anxious that we should all become property owners. Everyone, including council house tenants, should be able to buy their own home. Noble Lords have been debating that earlier this afternoon. But as we know, such decisions have often been disastrously unforunate for some people. Trapped in what is euphemistically called "negative equity", their houses will fetch less on the market than the amount they borrowed to pay for them, and they need to sell because they no longer have jobs which will enable them to meet repayment obligations. The idea that the next generation would inherit their parent's home and thus be better off than their parents has also ceased to have much validity.

Local authorities are expected to shoulder the burden of caring for the elderly and disabled in their areas, but in many instances lack the resources to do so, so the homes of elderly people are increasingly having to be sold in order to meet the costs of residential care. Everyone knows that housing policy is in a mess and at the root of it lies basic insecurity of employment.

I was talking recently to a former colleague in the insurance industry. He told me that life insurance sales are at an all-time low. The reason is not only the scare about personal pensions and what that has meant generally in the insurance market. The main reason has been identified as the refusal of people to make long-term commitments. That is because many of them do not know whether they will be in employment in 12 months' time and will not take on a commitment to pay insurance premiums which they feel they may not be able to afford in the future.

Law and order is a major issue for all political parties. I certainly would not seek to maintain that the cause of it is deprivation alone—of course, the whole matter is much more complicated than that—but the fact that young people, particularly young males, now have such a low expectation of employment and, indeed, doubts about their role in society as a whole, must play some part in the growth of violence among this particular group.

What I am saying is that the general insecurity that clearly exists is undoubtedly the reason for the lack of the "feel-good" factor which Government spokespersons are clearly concerned about and which, in my view, is likely to lose the Government the next election. It is really no use saying that unemployment is going down; that the claimant figure is lower than it has been for some time. Yes, of course, I have seen the figures.

I have to say to the Government that they have a credibility problem. No one believes them any more. It is impossible to open a newspaper without seeing that one or other major institution is about to cut thousands of jobs; whether it is banking, milk marketing or even the Post Office—despite, incidentally, the latter's record profits.

People know that redundancies have been taking place where they work; or their children cannot get jobs and their neighbours are out of work, and so on. Everyone also knows that the claimant count underrates the numbers of those actually without work since the method of calculation has been changed so many times, and will undoubtedly be changed again as a result of the Jobseekers Bill recently debated in this House.

The Government will undoubtedly say that the solution is simply more of the policies we have already had; fewer protections for workers; opposition to the social chapter and to EU directives like, for example, the hours of work directive, which would surely help to create a little more employment throughout Europe.

Frankly, I do not believe the Government's case. We have had these policies now for over 15 years and the results have not been good. There has to be a determined effort by the Government to bring in policies designed to ensure investment in jobs and in the UK economy. I am sure that a number of my noble friends who are to follow me in the debate will elaborate on that point.

I do not deny that there is an international dimension, but our future, and the future of our workforce, should not depend on driving our conditions down to third world level. Steps must be taken to restore a sense of security to the large mass of UK workers who at present do not have it. They lack it directly because of some of the policies initiated by the Government and in particular by policies associated with the name of the previous Prime Minister.

I believe that a Labour Government would indeed have the commitment and zeal to embark on such policies and would use their best efforts to ensure that our European partners joined with us in a concerted attempt to reduce the levels of unemployment throughout Europe and restore a sense of stability and security so much lacking at the present time. I beg to move for Papers.

6.19 p.m.

Lord Dahrendorf

My Lords, we all owe the noble Baroness, Lady Turner of Camden, a debt of gratitude for having introduced a debate which takes us right to the heart of current problems of employment, of social cohesion and of the welfare state. When about 18 months ago, on 10th January 1994, we debated in your Lordships' House the question of flexible working, I took the opportunity to say: We must beware that the notion of flexible working does not become an excuse for a return to casual working on a large scale".—[Official Report, 10/1/94; col. 42.] Today we have casual working on a large scale and the question is what can we do about it.

Let me start with one basic principle. In my view, a flexible labour market is a necessary condition of competitiveness in a global market-place which can be very cruel. A flexible labour market is one which takes us away from the rigidities which have come about as an exaggerated form of the security for which people are rightly and justly looking. However, flexibility can be taken to an extreme in which its cost is almost higher than its benefit. The noble Baroness, Lady Turner, pointed out some of the costs in terms of insecurity, disorientation, fear, short-termism and even the effect on law and order. We have to find a balance between flexibility and security. It seems to me that that is the key issue with which we are faced in this area and perhaps with regard to employment in general. But the question is: how?

Some of us have a preference for a course which is expensive and which is not likely to be implemented in the near future. I refer to having a basic income guarantee or a citizen's income. I, for one, should not be surprised if my noble friend Lady Seear at least hints at the fact that she and I share that preference, although we have found it hard to persuade even our friends of its immediate implementation.

However, we have to start somewhere. One important idea that I should like to reiterate is that there is a case, in order to provide more reliable employment for more people, for topping up low wages to take them to a decent level. Because this is my main point, I say deliberately "topping up low wages for employees" rather than providing employers with so-called "incentives" to employ more people. The principle behind that is that in a world in which there is an inevitable degree of casualisation, individuals have to be placed in a position in which they can deal with the flexible world in which they are living by having some degree of security.

That leads me to one conclusion. When it comes to the balance between flexibility and security, we must rethink some of the principles and some of the practices of the welfare state. We may even have to rethink the very name "welfare state", which may not be appropriate. By that, I mean that we have to find a method of enabling individuals to get through the insecure world in which they are living with a security that they can carry with them. We have to find methods of making benefits transportable and a new way of relating contributions from individuals, employers and the taxpayer through government.

Perhaps I may give two examples. I shall call the first "individual learning accounts". Looking at all the relevant studies, there is little doubt that the right education and training are still one of the best roads back to the kind of employment which provides at least some steadiness. However, education cannot, and must not, be a one-off. Education must be a lifelong opportunity. In order for it to be a lifelong opportunity, people have to be able at any time in their lives to return to courses of education and training. I think that that can best be achieved by having learning accounts which are attached to individuals and fed by employers, by the individuals themselves and, where the need arises, by the taxpayer. In other words, those learning accounts will not simply take the form of vouchers, but will be something on which a man or a woman in the course of their career can draw when they find it necessary to switch career and when they need some training to improve their job opportunities. Incidentally, such individual learning accounts might well also be fed from redundancy funds whenever people are made redundant. Indeed, redundancy is part and parcel of the problem that we are considering.

I shall have to give my second example far too briefly to be able to do justice to the importance of the issue. I refer to the way in which pensions are financed. They, too, must be transportable. They must be a combination of, on the whole, compulsory contributions from individuals, employers and, where necessary, the taxpayer or the state. I can envisage a compulsory and in many ways private pension system which would provide a certain degree of security to people who would otherwise be left totally exposed as a result of their form of employment.

Those points raise enormous questions with which we shall not be able to deal satisfactorily here. I certainly shall not be able to deal with them satisfactorily now. However, what I am saying is that casual work is just about bearable for quite a few people if there is a safety net. In the decades ahead, the safety net is not likely to be the state. It is likely to be a more complex contributory safety net, to which individuals and employers contribute as much as the taxpayer. There will probably have to be a compulsory element. Unless we rethink what we have come to call "the welfare state" along that dimension, together with losing regular lifetime work, we shall lose a whole set of values which are crucial for a society which is truly wealthy and not just rich.

6.27 p.m.

Lord Carr of Hadley

My Lords, I must first apologise to your Lordships for the fact that I shall have to leave the House just before eight o'clock. That is to fulfil an engagement which made me reluctant to put down my name to speak in the debate although I very much wanted to. I was persuaded to do so only at the last moment this morning.

I, too, thank the noble Baroness, Lady Turner of Camden, for raising this deeply important and interesting subject. However, I thought that she painted a rather black picture. We do have a problem with casualisation, but I am under the impression that this country still has one of the lowest percentages of workers in temporary employment. That does not make us good, but we are not among the worst.

I cannot help but mention that for the first time in my lifetime we have an economy which is highly competitive. We have rising exports, rising productivity, rising employment (although from a low level) and controlled inflation. In my lifetime, whatever the government, I have never known our economy to be so strong and so potentially fruitful. So there is a good side to the present position as well as a bad side. Having said that, I understand what the noble Baroness said and I sympathise with her feelings about the problems being experienced by many of our fellow citizens.

However, I do not agree with the remedies—or at least the implied remedies—which the noble Baroness and her party are putting forward. Twenty years ago—certainly 30 years ago—I might have agreed with a great many of them, but I doubt whether the noble Baroness or her party as a whole have yet fully adjusted their ideas to the degree of economic change that has taken place not only in this country but throughout the world. In the first two or three decades after the war, the labour market was based on a relatively small number of fairly well-defined industries, usually employing relatively large numbers of people on single sites of an average and increasing size, with centralised hierarchical systems of control both on the employer's side and on the union side and with a high percentage of those employed being relatively unskilled production or administrative and clerical workers. All that has changed, and it has changed in a frighteningly short time. Companies as a whole, or in their separate parts, now wax and wane much more quickly and unpredictably than they did in the past.

Decentralisation of decision making, flexibility and innovation of products and processes, as well as methods of management, are now the order of the day. They are in fact essential requirements for survival, let alone for prosperity and success. Above all, of course, from the point of view of our subject tonight, the demand for unskilled and even semi-skilled staff in factory and office has collapsed rapidly and alarmingly. The labour market has thus changed very radicall; indeed. Some, perhaps much, of the change is unwelcome, frightening and unpleasant for large numbers of our population of all classes, and it is not easy to deal with.

So what do we do? I want to be clear that what I require personally of our labour market is that it should function in a way which maximises the number of people we employ. That seems to me the first vital function of a labour market. I have always believed, and still do, that long-term unemployment is a terrible cancer in our society. So how can we go on increasing the number in employment and move back towards what we might once again reasonably call full employment—something which, in our innocence, we believed 20 or 30 years ago we had achieved and could sustain, not foreseeing the nature of the changes which were shortly to hit not only this country but every country in the world?

One cannot go deeply into the matter in an eight-minute speech but I should like to outline what I regard as five vital spheres of action. The first, and most obvious, is education and training. I believe that the new infrastructure for both education and training in Britain is now better than it has ever been. The new structures in both fields still have to be refined. They are still creaking in their early stages. They have to be worked on and become more widely understand. I believe, however, that we now have a far better platform from which to jump forward in education and training in this country. The Government deserve some congratulations on the basic changes that have been made, although much still remains to be done. I urge on the Government and any future government the high priority, in terms of attention and money, that should be given to developing training and education in this country if we want to improve the level and quality of our employment. Money spent here, providing it is well spent, is genuine investment in wealth producing and income producing in the future. It is not expenditure on consumption.

The second need is to tackle the poverty trap in its many forms. This was a point which the noble Lord, Lord Dahrendorf, very interestingly opened up in his speech. The division between benefit and income suddenly has to be changed. It is not easy. However, we have got into the trap of feeling that if you have benefit you must not earn and if you earn you cannot have benefit. One understands that, but one realises the danger and difficulty of changing it. There are some signs, I am glad to say, that the Government are beginning to make that change, but I believe that much more thinking needs to be done in terms of the need for a minimum total family income and less in terms of benefits and minimum individual wages. All this requires a very deep and very difficult re-thinking of the national insurance system and the welfare state in order to meet the needs of a society so very different from 50 years ago when the Beveridge scheme was introduced. I hope, perhaps in my elderly innocence, that it is a problem that we can tackle on a much more all-party basis because there really is some fundamental rethinking to be done and ya-booing at each other frankly gets us nowhere.

The third need is to remove a large number of people from the income tax net. I may be alone in thinking this, although I hope not, because it is closely linked to my last point. In my view, the single most important change required to income tax system is to remove a large number of people from it altogether. That is more important than fiddling about with rates of tax, much as many of us would like that so long as the fiddling was in a downward direction.

The fourth need is to try to keep to a minimum the oncosts of employing people. Let us make sure that as much as possible of the cost of employment actually goes into wages and not into labour oncosts. I fear that this requires the minimum of regulation, and it is probably where I part company most obviously with the party opposite and the noble Baroness. We must remember that regulation is often unenforced and virtually unenforceable just where it is most needed. It is most burdensome and costly where it is least necessary. I doubt very much the validity of more regulation in relieving in practice many of the problems from which we suffer.

That is why I, for one, have opposed the rigidity and cumbersomeness of the European Social Charter. I made my maiden speech in Parliament way back in April 1950 on the subject of joint consultation in industry. I want to see that, but I do not want a rigid system applied to all industries and all companies. Each company, each industry, must develop its own informal methods which are best suited to worker participation and participative styles of management. We cannot have a rigid system.

My last point is that we must not forget something which had a high priority in the 1980s but has rather sunk now—the need for urban regeneration. We must encourage small firms in the old cities, because it is the old cities which have the largest concentration of dangerous poverty and unemployment. I believe that action under those five headings is necessary if we are to tackle the problems that confront us.

6.37 p.m.

Lord Gladwin of Clee

My Lords, I, too am grateful to my noble friend Lady Turner for enabling the House to debate this important issue this evening. The Motion implies, and my noble friend has spelt out, that work patterns are changing, that permanent and full-time jobs are giving way to part-time and temporary jobs and that the United Kingdom labour market is becoming more casualised, with unfortunate consequences for working people and disturbing implications for Britain's competitiveness in the world economy.

In many places we have a world of work where fear of losing the job is ever present: a world of peripatetic part-timers, hopping from one job to another, often having two jobs in the same week—a world in which workers, to use one of Professor Galbraith's memorable phrases, are "abundant, redundant and poor". It is a world in which part-time and temporary workers cannot say "no", because to do so would mean risking the wrath of the boss and probably getting the sack.

This view that work is becoming more casualised has recently been called into question by David Shonfield of the independent industrial relations body, Incomes Data Services. No less a figure than the industrial editor of the Financial Times gave Shonfield's challenge an airing in the pink pages. Shonfield makes three points. First, that part-time jobs grew faster in the 1960s than they have done in the 1990s; that the recent rise in temporary work is typical of this stage in the economic cycle; and that the proportion of people who have been with the same employer for 10 or more years is lower now than 25 years ago.

In my view, this analysis is outweighed by three further factors. First, the proportion of people doing part-time work in the 1990s is three times what it was in the 1960s; so part-time working is widespread today, whereas it accounted for fewer than one in 10 jobs 30 years ago. Secondly, a mounting minority is emerging in the secondary sector of the world of work: people are being forced into low paid temporary jobs. Even managers who previously held jobs in the premier league of the labour market are experiencing relegation to the lower divisions, where rewards, status and security are poor when compared with their former positions. That is a kind of 3D world of the middle manager who has been downsized, delayered and devalued.

The third and most compelling of the factors that the FT analysis understated is the experience of redundancy and unemployment, which is much more common today than it was three decades ago. Between a quarter and a third of today's regular workforce may have gone through a period of unemployment in the past few years, and 80 per cent. of people say that they know someone who has lost their job in the past five years. In short, the reassuring message that casual work is still the exception to the general rule rings increasingly false.

Professor Galbraith introduced another phrase into the English language a few years ago. He talked about "the culture of contentment". What we are witnessing today is not a culture of contentment in the labour market, it is a widespread sense of insecurity at work. Human resource management consultants talk about empowering the workers and higher rewards. But very many employees live a life of no say and low pay at work.

The legal changes that the Government introduced in the 1980s had a dramatic effect on employment security. At a stroke they cut from 56 per cent. 20 years ago to only 36 per cent. today the percentage of the population of working age who enjoyed rights to protection against unfair dismissal and to statutory redundancy pay. Casual workers are left with rights at work which are threadbare and limited. They also face the poorest prospects. Not for them the feel-good factor.

In a world in which companies increasingly stand or fall by the quality of the product they sell or the standard of the service they provide, nothing matters as much as the skills and motivation of their workforce. Our skills gap is worrying. In German manufacturing industry, 64 per cent. of foremen hold higher intermediate qualifications—in the UK, the figure is 3 per cent. In Germany, 90 per cent. of supervisors possess formal qualifications—in the UK, it is under 50 per cent. In the USA and Japan, 90 per cent. of managers hold degree qualifications—in the UK the figure is less than 25 per cent.

A well-trained workforce whose morale is high holds the key to competitiveness. Yet the recent CBI report on flexible labour markets sidesteps the question of who will pay to train Britain's increasingly casual labour force. No training means no skills, and that means further downmarket drift. Part-time workers do not lack loyalty to their employers. Many of them have long-service records that would stand comparison with their full-time colleagues, but they get short shrift when it comes to training. That is where they lose out, and industry's failure to invest in its people erodes Britain's competitive base.

The Government passed up the chance to support those important members of Britain's workforce when they opted out of the European Social Chapter. They did so arguing that industry opposed any idea of bringing employment rights in Britain into line with standards elsewhere in the EU. That is an untenable position. It is becoming more and more so as days go by. The evidence is there for all to see. In February this year the Government were obliged to bring UK law into line with EU rules in respect of the employment rights of part-time workers.

Equally significant has been the increasing readiness of British business to enter voluntarily into agreements with the trade unions to create European works councils, despite the UK opt out. Trade unions, including my own, have signed European works council agreements with, for instance, United Biscuits and Coats Viyella. There are many more voluntary agreements in the pipeline. What is happening in British industry is different from the rhetoric that we hear from the Benches opposite.

There is a school of thought, which is articulated mainly by politicians rather than industrialists, that believes in insecurity; that believes—it is called freeing up the labour market—that it keeps people on their toes; it gives employees a sharper edge; it makes companies more competitive, more dynamic.

I do not accept that view. In my experience insecurity creates an inward looking, unproductive environment, where employees are resistant to change, and change—sometimes rapid change—is essential if British industry is to be and remain competitive. Therefore I am glad that some of our major industries and services have recognised the need to train their workforce in modern transferable skills; to guarantee employment for those who want to stay with the company; to achieve manpower reductions by natural wastage, voluntary redundancy and early retirement; and to work with the trade unions rather than shut them out or derecognise them altogether—in other words, to create a secure environment where training, and retraining, are a constant, where ideas and talent can flourish, where change is positive and welcome, and where transparency and co-operation replace secrecy and conflict.

6.46 p.m.

Baroness Lockwood

My Lords, I should like to look at two different but overlapping aspects of our discussion. The first concerns the growing participation of women in the labour market, bringing with them their different needs and patterns of work; and the second is the growing casualisation of the labour force as a whole, affecting both men and women. I would remind the House that there are over 10 million women in paid employment, comprising almost 50 per cent. of the labour market, and set to exceed that by the end of the century. Of those, 45 per cent. are part-time workers.

For all sorts of reasons, part-time work has been increasing over the past 30 to 40 years. So it is not a new or temporary phenomenon. Part-time work suits many families with young children. It is mainly mothers who opt to work part time, but not necessarily so. Where parents want to spend more time bringing up their children they should be accommodated in doing so as a recognised feature of the labour market. That is not a one-sided benefit. Companies too are advantaged by part-time employment, because it gives them the flexibility to meet their labour requirements.

What is new in the situation is the growing involuntary part-time work involving largely men. It is important to emphasise that part-time work should be a matter of choice, and should not be forced upon those who are seeking full-time work.

There have always been problems with part-time work. Historically it has been less well paid and is regarded as being more peripheral. That affects not just pay but, with honourable exceptions, it affects also employment opportunities, promotion and access to training.

During the past decade, the gap between full-time and part-time pay, at all levels in companies, has widened, with those at the bottom end of the market suffering most. For example, the 1994 Summer Labour Force Survey found that 2.2 million part-time and 170,000 full-time workers earned less than the national insurance threshold, which is £57 a week; and 2.9 million part-time workers, including 290,000 full-time workers, earn below the tax threshold of £66.50 per week. The price of that is that those not paying national insurance contributions forfeit the right to retirement pension, full maternity pay, redundancy and sick pay. They are the low-paid and insecure of today who become tomorrow's pensionless elderly underclass.

Not all part-time workers are women but the majority are. However, during the past 10 years there have been other changes in the labour force. As my noble friend Lady Turner indicated, in the summer of last year some 38.6 per cent. of workers were so-called non-standard workers. But, taking the analysis further, earlier research published in the Oxford Economic Policy Review, showed that in 1993 only 35.9 per cent. of all in full-time employment qualified for all employment rights.

Given the growth in part-time, temporary and self-employment, the position will not have changed very much in the two intervening years. That is a very serious situation. A number of trends have contributed to those changes in the labour market. A decade ago, in the light of new technologies, we were encouraged to believe that we should have a shorter working life in all its aspects. But somehow that does not seem to have happened. More people are working consistently longer hours and more people are not working at all or are working for a pittance.

Secondly, the Government's policies in relation to the deregulation of the labour market have left workers with less protection. Those two trends have in themselves encouraged more companies to restructure or down-size; in effect, that means to shed labour either through redundancies or splitting jobs. Splitting one job into two part-time jobs can mean savings in relation to national insurance contributions, sickness and holiday pay.

The effect of that has been to bring about a general sense of insecurity and, as my noble friend said, a lack of the feel-good factor about which the Government complain. That psychological effect is not without foundation. Unemployment is still high; redundancies are occurring at all levels; and new jobs that are being created are non-standard jobs.

That is not the way to build a healthy economy capable of meeting the long-term competition created by the new information technology era. For example, I heard on the radio last night that Trusthouse Forte has again begun to Mink of the advantages and savings involved in maintaining a loyal, well-trained and highly motivated workforce. That is significant. The noble Lord, Lord Carr, indicated that some of the problems which we are facing need an all-party approach. I suggest that, first, the Government need to rethink their own labour policies so that we might then begin to build on that.

6.55 p.m.

Baroness Dean of Thornton-le-Fylde

My Lords, I too welcome the opportunity to have this debate today. In preparation for it, I looked at the debates which have taken place in your Lordships' House. January 1994 was the last occasion on which we had a major debate on this subject and that was on flexible working. Sure enough, in that debate the whole area of the casualisation of the labour market was a key factor.

Of course, casual labour is not new. It has been with us more or less ever since work has been with us; for example, in the agricultural sphere, seasonal work, covering for people who are on holiday and, more recently, covering for women who are on maternity leave. But what is new is that the incidence of casual labour has increased by something like one-third in the decade 1984 to 1994. I suggest that we are now dealing with an area of shifting sands in the structure of employment as we have it in Britain today. I suggest equally that government policies have done very little to help to maintain some kind of stability in the employment field and it is absolutely essential that such stability should be maintained.

Despite the fact that we have seen an increase in casual labour, in that same period we have also seen workers in Britain working longer hours each week than those worked by any other European Union countries. Indeed, we are not only working longer but our hours have increased in that decade rather than decreased compared with the hours worked by individuals in the other member states of the Union.

I do not suggest to your Lordships that all the jobs in the casual labour field have been created as casual jobs because I know that that is not a fact. My experience is that we have seen a shift from full-time employment, permanent employment, into casual employment in the same jobs in companies which previously had a static labour force and whose employees had many years of employment with them.

That has brought with it a shift for individual employees from independence to dependence. I suggest that that is where we start to see the breakdown of an agreed set of values between employer and employee in work and in our society at large in relation to what we regard as the basic rights and responsibilities of our citizens.

Casual workers do not qualify for pensions. Who will pay for those in future? Casual workers do not qualify for holiday or sick pay or for training in most cases. Therefore, to become a casual worker all too often means that it is the seal of fate on your existence and that of your family.

I was extremely concerned to read some figures published by the TUC a short while ago which showed that in the autumn of last year 90 per cent. of the new jobs created were temporary jobs—jobs of a very short duration. I take the point which the noble Lord, Lord Can, made about deregulation. The Government introduced one aspect of deregulation which I suggest has encouraged casual work; namely, to extend to two years the period before which an employee has any kind of protection. Therefore, in industry we now have 23-month contracts. Short-term contracts are brought about deliberately so that the employer does not face employer responsibilities. Of course, that trend means that there is a price to be paid. That is paid not only by individual casual workers but by their families because they suddenly find that they are dependent, whereas previously they were independent. It affects our social cohesion. As my noble friend Lady Turner said, the feel-good factor will never return while we have that pool of workers within our community who feel alienated from the mainstream of society, because that is its effect.

The taxpayer must also pay the price of that. As I said, who will pay the pensions in the years ahead if the individuals cannot contribute, as they cannot if they are casual workers? Who will provide their sickness benefit? Who will provide the support that they would normally generate for themselves? Of course, it is the taxpayer who will have to do so. Moreover, in many instances, the employer will get away with it.

If one looks at successful companies in Britain—and there are many of them—it will be seen that they are successful because they have a good relationship with their employees and usually with their trade unions; that they value their employees; and that in return their employees give loyalty. But what loyalty can any employer who gives only casual labour expect from his workforce? An individual's loyalty cannot be expected and should not be demanded. Such individuals are, therefore, not part of the growth and the wealth creation which are so terribly important to the success of our nation.

In 1994 a survey was carried out in the health service called Workloads, Pay and Morale of Nurses. The figure in 1991 for nurses who felt insecure about the future—I am talking about qualified, trained nurses—was 20 per cent. However, just three years later, in 1994, it had jumped to 53 per cent. I do not believe that we can over-emphasise the insecurity factor which is felt generally because people cannot plan their futures. How can a young couple decide to buy a home if they cannot get a mortgage because they do not have the permanent or regular employment that one would normally have expected them to have?

Dr. Barnardo's published a report only in the last week in which over a thousand adults were questioned. Predominantly, those who said that they did not think that their children in the future could expect full-time permanent jobs were actually in full-time work. Roger Singleton, who is a senior director of Dr. Barnardo's, said: The findings of this survey paint a depressing picture of adults' perception of the future for today's children. It is widely believed that children no longer grow up in a secure environment with the prospect of a permanent job if they do well at school. The confidence and optimism of previous generations has been replaced by a feeling of powerlessness". What an indictment of our society today.

The Royal Society of Arts recently published a booklet entitled Tomorrow's Company. It was refreshing, it was welcome and it called for what all good employers want. It declared that companies which sustain competitive success will focus less exclusively on shareholders and financial measures of success and instead include all stakeholder relationships. It also declared that companies should clearly define their purpose and values and that those which deepened their relationships with their employees would succeed. The debate is important, and I suggest that it is important not just because of the casualisation of labour; it is important for our community as a whole.

7.3 p.m.

The Viscount of Oxfuird

My Lords, we are all grateful to the noble Baroness, Lady Turner, for bringing the subject to our attention. It is a most important subject and one which has developed over the years. My own experience has been in manufacturing industry. However, there is one thing that I should like to bury before I go any further—the word "casualisation". It is 75 years old and, please, can we today consign it to the incinerator because, as a word, it is not a compliment to our rich language. In fact, it is a noun which has not derived from a verb and for which we had to find a verb to make it work.

As I said, we are discussing a most important subject—even more so today as we emerge from a recession and are faced with falling unemployment and a demand from industry for skills that at present are not readily available in our labour market. Faced with that reality, it is essential that we should strive to maintain a very high degree of flexibility in responding to market needs. That means that we should welcome part-time working, particularly as regards encouraging women who have taken a break from the labour market to raise families to return to work. We should also encourage adult retraining schemes and programmes of "continuous improvement" within the labour market.

There are many statistics which can be bandied about the Chamber on the subject. Just looking at a couple of them which have already been quoted this evening one sees the suggestion that the average worker in the United Kingdom is working more hours in comparison with EC countries. That is not correct because the average United Kingdom hours were 38.9 and the average EC hours were 39. That is not much of a difference but, nevertheless, I am sure that it is statistically important.

So far as concerns the United Kingdom's comprehensive framework of protection rights, all employees, regardless of their hours of work, have rights which apply from the very first day that they walk in through the factory door or wherever they are going to work. That includes protection against unlawful deductions from wages; discrimination on grounds of sex, race, trade union membership or non-membership; and the right to maternity leave.

There is a question which always appears; that is, the national minimum wage. I believe that it requires rather more thought than it has been given to date. With it goes the roll-on effect of the differential—the differential between the pay demands of the skilled versus the unskilled worker. One man's pay rise is, sadly and frequently, another man's redundancy.

What we must avoid at all costs is over-regulation. It is essential that we fight to retain the opt-out negotiated at Maastricht by my right honourable friend the Prime Minister for the so-called social chapter. The key to success for our country as we approach the next millennium will be the maintenance of the competitiveness of our industries. That will be achieved only by nurturing a well-trained, highly motivated and, above all, flexible workforce. If flexibility leads to an element of casual working, then so be it.

Let us look at practice as it is in some manufacturing companies. Survival of a company in these last years of recession has been vital and it is only through the use of casual labour that many have been able to pull through. Let us look at an industry in which I have had some experience—the manufacture of fork-lift trucks. Much of the componentry is made up of welded sub-assemblies. If such a factory is operating at 50 per cent. of its capacity or less, the use of casual welders is vital as a tool for survival. It is better that we use that casual skill in such a way than risk the jobs of the other employees at the factory, numbering many hundreds, being put in danger.

The overriding necessity is, and will be, to accelerate the growth in our gross national product. We must create wealth and hence build a society in which the standard of living for the whole population can be raised. That will never be achieved by over-regulation; it will only be achieved by flexibility.

If we seek a role model we should look not to continental Europe but to Singapore, which is not really a third world nation as some people tend to describe it but one of the most growing and thriving markets and producers in the Pacific Rim. A visit to Korea might also stimulate views on the subject of energetic and effective work. Our 19th century greatness was achieved by nurturing a flexible labour market and I genuinely believe that we must not forget the lessons of the past, particularly as we have to look to the future.

7.10 p.m.

Lord Houghton of Sowerby

My Lords, the pressure on time in this debate is an indication that we should have more debates on this and allied subjects. This is not a subject; it is a survey of the national problems, their ills and the dangers and opportunities at this juncture in our long history.

The speech that we have just listened to represents the authentic voice of some points of view about the present state of our economy and conditions of employment. It deserves to be examined, and so do other aspects of this matter. I rise in the short time that is available to raise a question which I doubt whether other noble Lords will bring forward, and that is the problems of the public sector, where the Government, as a matter of deliberate policy, are introducing insecurity, uncertainty, redundancy and lower pay. They are in fact injecting the evils of society and employment into the range of public service.

The Government are still by a long way the biggest employer in the land. Think of the National Health Service, the teachers, local government service, the Civil Service generally and taxation. There is a philosophy with regard to public service which has been long built up as regards the protection of those who work in it from much of the insecurity and devastating distractions that frequently arise in outside employment. What are we to do about the injection into this vast public service of a degree of insecurity which, happily, it has not suffered up till now? This is a deliberate attempt to bring the public sector into line with the private sector and subject it to the infections of private employment and private enterprise with which we are all familiar.

I can do little more than sound an alarm that what is happening in the public sector is creating a state of mind which I think is a danger to the quality of our public services. We do not really need to go to the United States to discover how to introduce new principles into our public services. We have a country of our own and we have standards of our own but the way we are going we shall probably be forced, either willingly or otherwise, to introduce competition and cost-effectiveness into service to the public, into service to patients in hospitals, into service to the public in education and into service to the public in other branches of important service that can come only from the state.

The other day I was talking to a doctor who said, "In our practice we can do very little more than talk about money". Are we soon to talk about cost-effectiveness in the treatment of patients? In the Civil Service one cannot talk about anything now except to ask when people's work will be put up for sale. The Civil Service is going into the slave market because the Government want to reduce the size of it and they want to introduce deliberately a degree of uncertainty in the public service generally which they think will stimulate people to further effort.

Look at the disaster of the Child Support Agency, whose work we have been discussing for the past two days. That has come from a Government who think they have the prescription for a more successful Britain but they fail when it comes to big questions of organisation and management. The Government do not understand the problems of size and what is needed to keep a large body of people under one employer and on diverse tasks in conditions of relative contentment and with a devotion to the work in hand. A discontented public service is a danger to the nation and it is the duty of government to try to bring the public sector into reasonable relationship to conditions generally without subjecting it to the same devastating consequences which, unhappily, are occurring elsewhere.

I think that it will be necessary for your Lordships' House very shortly to give more attention to what is happening in the Civil Service and in the public services generally. What are the principles of public service? What is the ethos of the public sector and what are the standards of service to the public? What I fear is that, in order to save staff, the Government will reduce standards of application and enforcement of the law. Bear in mind that the public services are administering the law and that is where the ethos of the public sector comes in. The law must be administered fairly, with understanding and without bias. Attention must be given to cases which require a good deal of attention but which, from an economic point of view, will be pretty expensive. But that is what the public service is about.

There are signs already that part of the savings which the Government wish to make will have the effect of reducing pressure as regards enforcement of the law. Taxpayers not worth pursuit may not get pursued and the laxity will spread into the system where one pays if one likes or one pays what one wants. Bear in mind that in the immediate offing there is the self-assessment of income tax. The Government are going to shift the work of thousands of tax officials on to the shoulders of the taxpayers themselves. They are all going to sign their own little death warrants and send them in to the Inland Revenue to be told whether or not they have their sums right. But, when it comes to the point, one will find there is mail-fisted enforcement. Penalties will come into it. The spread of automatic penalties in the public sector is disgraceful. The courts are being deprived of the power to administer justice. A code of automatic penalties is growing up in the taxation system. It is dangerous to the ethos of public administration.

That is my warning, my Lords. I hope that before very long your Lordships' House will spend a little time on a subject which we need a Royal Commission to study—namely, the future of the public sector in today's changing society.

7.20 p.m.

Lord Monkswell

My Lords, this debate will have been significant if only for the important contribution of the noble Lord, Lord Houghton of Sowerby. He issues a clarion call which we shall ignore at our peril.

I should like to quote a few examples of the effect of casualisation, touch on some lessons we can learn from history and suggest some ways forward.

My first example is of an 18 year-old man in Manchester who recently got his first job working at McDonalds. He worked first from three o'clock to one o'clock on Saturday night. He then worked from four o'clock to one o'clock on Sunday night. He thought that he would then be working the next Sunday, but on Sunday morning he realised that he should have been working on Saturday. He phoned up and said "I'm sorry I didn't come in". They told him to come in the next Wednesday, Saturday and Sunday. When I heard that story I wondered what kind of lesson that young man was learning. It illustrates exactly what the noble Baroness, Lady Dean of Thornton-le-Fylde, mentioned—the fact that employees feel no responsibility towards their employers nor employers towards their employees in a casual and temporary labour market.

The next example is the case of a highly skilled professional property services manager who works on the basis of a three-month contract. He is on his second three-month contract. He looks after a very complex building, which should have his attention over a long period of time. He should have a long-term perspective, yet he is employed on a three-month contract. How can he be expected to take a long-term perspective on the rational utilisation and maintenance of the building if he has only a three-month contract?

My third example is the Child Support Agency. Other noble Lords have already referred to it. Its record of abysmal administration is appalling. Only last night I heard of the case of a man who received on the same day three different assessments from the same office. That is public administration gone mad. It is the bureaucracy of the anarchist state. I do not know whether it is true, and perhaps the Minister will either confirm or deny it, but I have heard that a third of the Child Support Agency's staff is temporary. If a new bureaucracy is being set up and a third of the staff is temporary, how can you build in the training and achieve the long-term continuity and commitment of your staff that is necessary to work effectively? Whether or not one agrees with it and whether or not one thinks the rules are right, the Child Support Agency does not seem to work effectively. It is a fundamental problem for our society if we cannot set up a new bureaucracy that will work effectively. It is only by a saving grace that our older bureaucracies, such as the income tax and VAT systems and the public administration of our universities and polytechnics, manage to carry on. If we impose too much change on those bureaucracies—and they are suffering change—will they crumble? Serious problems are caused for our society by the process of temporary, casual and short-term employment.

What can we learn from history? I am proud to be a member of my union, which started as the Association of Engineering and Shipbuilding Draughtsmen. That trade union began on Clydeside in the shipbuilding industry because of the casual nature of the employment of draughtsmen. Shipbuilders who had a ship to design and build would hire draughtsmen to draw the necessary drawings, and once the ship was built they would lay off the draughtsmen. That created all sorts of problems for the workers. Through their unionisation they told the employers that they would no longer accept that. They forced shipbuilding managers to run their industry more effectively so that there was continuity of employment. Not only were the shipyards utilised more effectively but, because there was continuity of employment, they could build in the training and other positive attributes that result from continuity.

I was very interested in the contribution by the noble Viscount, Lord Oxfuird. I hope that his noble friend, Lady O'Cathain, will explain to him that it does not make sense to run manufacturing capacity at around 25 per cent. It is nonsense. I hope that she will be able to explain that to him when she next sees him.

Looking at another historical element, the casual dockworkers' employment system gave rise to what is now known as the Transport and General Workers' Union. The union has a proud record of fighting for the rights of dockworkers and the creation of what became the dock labour scheme. That contributed greatly to the stability of employment and was part of the mechanism which ensured the full employment to which the noble Lord, Lord Carr, referred and which we all assumed 20 or 30 years ago was here to stay because it was so beneficial. It was an article of political faith.

I touched on the question of full employment. It is the key. It is only when you have full employment and effective trade unions that you can develop a scheme of employment rights and protections that ensure that casual workforces are not tolerated. Other noble Lords have suggested that we should change the law to encourage decasualisation and give employment rights from day one rather than after two years. That is important. We should also encourage and support trade unions and what they stand for. It is only by working with the representatives of organised labour that we can ensure that the prospects for people in employment in this country are improved to the extent that we lose the detriments and problems for our nation as a whole which result from the casualisation of employment.

7.30 p.m.

Lord Rea

My Lords, the term "casualisation" which my noble friend Lady Turner described so well in her impressive opening speech has a much more euphemistic, more polite name—flexibility in the labour market. Under that term it can be held to be the "exploration of new patterns of employment" which allows employers to contain costs and improve productivity. In the face of economic recession, firms have shed workers, but if firms have survived, they have often "downsized", as has been described by a number of noble Lords, leaving a core group of employees, usually full-time, indirectly employing temporary employees. They can take them on or drop them according to demand. Those workers are either part-time or on short-term contracts. Alternatively, they are workers for other firms with which sub-contracts have been made. Often those workers are supplied by agencies which specialise in one or other skilled or professional category of worker. Some of those agencies have become quite prosperous recently.

Perhaps I may give one example of the use of agencies. I refer to the use of agency nurses by the National Health Service. I consider that to be a costly and sad example of flexible working. It is only slightly improved upon by the nurse bank system. Both undermine the continuity of care which both patients and nurses need. To have a continuous job at which they can get to know their patients and to learn their craft in a more satisfactory way gives nurses proper work satisfaction.

The downsized firm, cushioned by the ability to contract to a minimum size in adversity, has been dignified by the title the "flexible firm" by the Institute of Management Studies, for instance. However, that approach is seldom the result of rational planning, as it is often made out to be. It is usually caused by knee-jerk responses—ad hoc responses might be a better term—to short-term changes in demand or workload. After a recession, firms which have had their fingers burnt take on workers whom they can shed without pain. Thus many of the jobs which unemployed people accept are not as secure as jobs which they may have held originally; and those coming in to the labour market for the first time have to take part-time jobs for want of anything else.

As almost every noble Lord has hinted or described, it is perfectly true that the skills required for today's labour market are changing rapidly. A well educated and skilled Workforce will meet those requirements best. I do not think that anyone disagrees with that. But the increasing predominance of part-time and short-term jobs is surely not best calculated to achieve that flexible range of skills which we need.

It is said by too many people that the industrial world now has institutional unemployment. However, as my noble friend said, part-time work for millions of people represents a further tranche of concealed unemployment which is not reflected in the official statistics. It is true that many people, in particular women, welcome the increased availability of part-time work. However, many more would much prefer secure full-time employment if they could achieve it. Many women are in part-time work not because they want it but because their partners who may be unemployed or in low paid work have insufficient income to sustain more than a basic standard of living, which is not acceptable in today's high-tech, high consumer society.

In March of this year we debated the Rowntree Report on income and poverty. It indicated that inequalities in income and wealth are increasing. Many of those in poverty are either unemployed or in the type of low paid work that we are discussing today.

Parallel with the findings of that report is the increasing evidence that people's health status is directly related to their relative income. Those in casual work are doubly disadvantaged; they have low wages as well as low prestige and lack of control over their working conditions. It is hardly surprising that their health is worse.

The United Kingdom has perhaps the lowest labour costs among the major industrial nations. However, I suggest that that is not something to be proud of, as noble Lords opposite sometimes suggest, but something to be worried about. It is perfectly possible to have a successful, high wage, high skill economy. Other noble Lords have pointed to the example of Japan, the United States and Germany, with an educated workforce and an up-to-date industry. The need to retrain and re-equip is recognised by all parties. An under-employed or unemployed workforce should surely act as a stimulus and even provides the opportunity for a much more active training and retraining policy. I believe that the ideas of the noble Lord, Lord Dahrendorf, are well worth following up.

Industry, which includes not only manufacturing but also service industry, must be encouraged or required by a mixture of carrot and stick methods—perhaps regulations but also rewards—to take on a far larger share of responsibility for training. There are good examples, but I suggest that there are not enough of them. Coupled with incentives to industry and to the City to invest in Britain, that concept is the way forward. Casual employment without training and retraining may seem better than unemployment, but it is leading not only workers but the whole country up a blind alley.

7.37 p.m.

Baroness O'Cathain

My Lords, I thank the noble Baroness most sincerely for the opportunity to debate this important issue. I am probably not the only one among your Lordships to be confused by the terminology that we use. My noble friend Lord Oxfuird has already suggested that we should consign the word "casualisation" to the incinerator. It is a nasty sounding word. However, I believe that there are three categories of non-full-time employment: casual labour; temporary labour; and part-time labour.

No one has mentioned the total number of people employed as casual labour. The noble Baroness, Lady Dean, stated that the number of casual workers had increased by a third in 10 years. But from what base? She also stated that successful companies treat workers well—not as casual labour. We ought to send a message out from this House that all companies must do likewise. A company with which I am involved has almost 130,000 employees, of whom 60 per cent. are part-time and 10 per cent. are temporary—to cover maternity leave, and so on—but there is no casual labour. I believe that that is the way forward.

I suggest that we should also update our views on what the labour market actually is, and how it works now. It is a market in the true sense of the word—buying and selling of labour. What it is not, and should not be, is a slave market. It should not be an arena of confrontation; it should be an arena of co-operation.

There are no jobs for life not because an organisation does not wish to have a long-term employment policy but because no company can honestly and confidently say that it has a long-term future. Takeovers, mergers, management buyouts and company failures all affect the labour market. That is not a uniquely British phenomenon; it is happening worldwide. Employers are also employees now. We are always confused about this. Managing directors and chief executive officers are "hired hands", like the rest of the labour force. There is no great divide, no "them and us". That has largely evaporated. It would be nice if we could drop the term "working class": those of us who have worked all our lives regard ourselves as workers, from whatever class. Let us do away with the term; we are trying to get Britain mobilised to go ahead and be competitive in the international world, not messing about with unnecessary class distinctions.

Most people in the labour market will have several different jobs requiring different (and in some cases very different) skills, which puts the emphasis on continuous training—both on-the-job and specific training modules provided by seminars, training courses or further education projects.

People in the labour market are increasingly demanding interesting jobs; their expectations have been raised and if they do not have them all fulfilled they will move jobs. The labour market exists on the basis of mutual dependence; organisations need employees and employees need and want jobs in organisations. But there is a huge demand for part-time flexible working in most organisations. Ironically, relatively recent legislation such as maternity leave provision has created a demand for part-time and temporary jobs. I do not believe that that is a bad thing.

With increasing international competitiveness, we must ensure that we have flexibility in all the activities of business, not just flexible labour but flexible finance, to mention but two essentials. Not only is there increasing international competitiveness but there is also a tragic world-wide problem of unemployment. How to balance the need for flexibility in the labour market with the genuine, heartfelt wish to reduce unemployment is a problem which no one, no country has yet completely solved. There are schemes to keep people at work, there are measures taken by national governments to keep people at work—only last week I referred to one such, state subsidies in aviation for failing airlines—but in the long term neither works without seriously damaging the competitive position of the country.

Fortunately, new ideas are constantly resulting in new markets, new products. Production processes have been transformed by new technology, resulting in huge increases in productivity. All those require labour, but it must be skilled labour, labour that can command high earnings because the product of that labour has the competitive edge. Refocusing, downsizing and increasing flexibility are now common features of business. We must meet the challenge to employment posed by that trend.

Several noble Lords have referred to education and training, and I too wish to do so. I believe that the greatest challenge lies in skills improvement. I suggest that it should be tackled on a tripartite basis. The organisation should produce the on-the-job training and, even if people are involved in it only as part-time workers, they should have additional skills by the time they leave which can lift them up further into another category in another organisation.

The second partner should be the Government, who should offer training schemes for the unemployed, even training vouchers, or something that I am keen on—expanding further the proposal of the noble Lord, Lord Dahrendorf. On many counts, it is brilliant and we ought to examine it again.

The third party is the individual himself or herself. The onus must be on the individual in some cases to become involved in distance learning, to try to "upskill" himself or herself, to use a horrible expression.

In order to be in the forefront of international business, it is vital that no measures should be taken which affect competitiveness—for example, increased employment costs through the social contract. Interestingly enough, I believe that, if Britain opted for the social contract, the casualisation—and that is the last time I shall mention it—process would increase. The statistics show that Britain has the third lowest share of temporary employment in the European Union (after Luxembourg and Belgium) with 5.7 per cent. in temporary employment. I do not know whether that is casual or temporary labour: I suspect both, according to my definition. However, the European Union average is 10.5 per cent., of which Germany has 10.2 per cent., France 10.7 per cent., and Spain 32 per cent.

My noble friend Lord Carr referred to on-costs. Sometimes we allow our hearts to rule our heads about the legislation we debate here, which results in on-costs. Flexibility in the labour market also demands flexibility in institutions. Institutions such as insurance companies and building societies are aware of the changing nature of employment trends and moves are being made to ensure that people have adequate insurance cover for periods of unemployment. For example, the Association of British Insurers stated recently that new products are likely to be developed quite quickly or existing products refined to provide mortgage protection insurance.

Let us not think that part-time work is a desperate last-ditch choice. People have said how many workers want it. There is a demand for it from employees to keep their minds active, to meet people, to finance extras such as holidays, but also to give proper care to children in out-of-school hours and to be able to be with children during school holidays. It also enables some carers to have other more agreeable activities which are good in getting them out of the house. There is a demand for part-time work from businesses for meeting peaks in customer demand, for meeting employees' wishes, as has already been stated, for protecting full-time employees from future downsizing, for cost effectiveness and for efficiency.

All those are important and unfortunately in the time we have available we cannot really explore them. A minimum wage will add to the costs of industry in some cases, but it will have an even more serious effect—namely, a significant increase in unemployment. Recently, the CBI held a discussion and issued a press release which indicates that: hundreds of thousands of current jobs would no longer be economically viable—particularly in the service industries but also in agriculture, textiles and clothing, where job opportunities for part-time women and younger workers would inevitably be adversely affected". It is such a shame that we are time-limited in the debate. However, the exposure and examination of the subject this evening has done a great service to the imperative for all of us to consider further this most important subject.

7.46 p.m.

Lord Desai

My Lords, we are agreed on a number of points: there are full-time jobs, part-time jobs, temporary jobs and permanent jobs. My noble friends on this side talked about casualisation, but they do not mean that the jobs are part-time, nor do they necessarily worry about jobs being temporary. They are worried about whether being in a job—part-time or full-time—on a casual basis somehow gives a worker an abbreviated set of rights compared with someone in a full-time job. That is one issue. I am being a pedagogue and trying to clarify the issues. When people talk about casualisation, they feel that someone who is a casual worker has fewer rights than a permanent employee.

My second point is associated with the first. I agree with the noble Baroness, Lady O'Cathain, that there is no way of finding out about the casual labour because the Labour Force Survey does not give casual labour and non-casual labour. It could be that being employed as a casual labourer either subjects a person to being paid a lower wage for the same job than if the person was not a casual labourer or that the other perks like holidays and pensions do not come into the wage packet as they do for non-casual workers.

Noble Lords opposite say either that casual workers do not exist or that they are a good thing and there should be more of them. I believe that they have not made up their minds about it. If casual workers exist, they are insecure their jobs and they probably receive a lower wage per hour. They feel that they certainly do not get the extras such as pensions and holidays that non-casual workers get. That is the nub of the argument and it is a pity that we have no reliable statistics to sort the matter out. It is in the nature of the behaviour of both employers and employees to hide the fact that a worker is casual.

Some people on the opposite side would like all workers more or less to be casual because it gives more flexibility. There is plenty of evidence about that. I commend to noble Lords on all sides of the Chamber the forthcoming World Bank development report called Workers in an Integrating World. It will be released next week. The World Bank is no friend of ours on this side but it takes a balanced view on matters such as trade union rights, job security and even the minimum wage. The report states that it is not possible conclusively to show that minimum wages lead to a loss of jobs. There is plenty of research on that. We on this side feel that taking the strategy that noble Lords opposite want, namely the casualisation of the whole workforce, flexibility—

Baroness O'Cathain

My Lords, I thank the noble Lord for allowing me to intervene. That is the second time that he has made the statement that noble Lords on these Benches would like the casualisation of the whole workforce. I have certainly not heard that from anybody here today. I believe that what he says is wrong. None of us wants that. But at the moment it is the reality of the labour market worldwide.

Lord Desai

My Lords, perhaps I was too provocative in my words. I shall be more sober in my content. If there is labour market flexibility, there lurks the question of non-wage costs. By pointing to the social chapter and so on, it is implied that such things as holidays, maternity leave, paternity leave etc. are basically just frills. If those "frills" are taken away, and if hours and conditions of work are not necessarily regulated, of course flexibility in the labour market is increased. If you want the labour market to be like the market for bananas, then of course you do not want workers to have any rights at all. A good neo-classical economist would more or less not see the difference: anything that treats workers differently from bananas is an interference with the market; that is not a problem. The issue is: does it help efficiency, productivity and long-run growth if workers are treated well? Some of us feel that it would be a great help if the word "flexibility" and the concept itself were not used in relation to universal casualisation. Perhaps it is not true; but the way in which people continue to attack the social chapter as if it were a great burden on the country, when practically every other country in Europe manages to have the social chapter, leads me to think that there is that sort of desire.

I recognise that the labour—

The Viscount of Oxfuird

My Lords, will the noble Lord give way again? There is a misconception that Germany is such a wonderful place for production and the structure of its workforce. Its position is such that I now know of a British company that benefits greatly from the German so-called social chapter in that it has just received a very large contract for the entire engine production to be used in Germany, as opposed to the cost of German engines. Our products are finding great favour, even in Germany.

Lord Desai

My Lords, there are always such episodes, and one cannot comment on every one. I have only eight minutes in a time-limited debate. It is not kind to interrupt me several times. However, I see that I have been effective in eliciting a response from the opposite side. That is very good.

I recognise that production conditions are changing. We live in a post-1940s technology. I am sorry that I have not had time to comment on the very interesting remarks made by the noble Lord, Lord Dahrendorf. The noble Lord asked us to suppose that labour market conditions in the world at large will cause us to move more towards what I call episodic employment—it is in fact the feminisation, rather than the casualisation, of work: men having labour experiences similar to those that women are used to having. If that is the case, can we sustain the welfare state on today's basis? That is a very important question that we have not had time to consider. If you complain a lot about the burden on taxation of providing employment, on the one hand, all that happens is that such costs are not borne by wages, and you end up paying in general taxation, through unemployment, sickness or other adversities. In a sense the Government have admitted as much by expanding the role of family credit. If employers are allowed to pay low wages, the taxpayer is asked to make up the difference. It is a matter of choice.

I am an economist. If you want to have the burden of low pay being borne by general taxpayers rather than by employers, that is one kind of income distribution. We do not like it. To the extent that these forces are worldwide and unavoidable, we have to meet the challenge. Our only request is: please do not add to the burden by further worsening the situation.

7.55 p.m.

Lord Haskel

My Lords, I welcome this debate. I too believe that there are many misunderstandings regarding flexibility and the deregulation of work. As I understand it, the Government argue that more flexibility is required because increasing competitive pressures and accelerating technical change are producing a more uncertain business environment. The Government think that the rational response to such uncertainties is deregulation, increasing the use of part-time labour and placing a greater reliance on short-term contracts, outworkers, home workers and sub-contractors in order to reduce a firm's dependence on full-time labour. Central to this approach are new forms of individualised payments and ways of making hiring and firing easier—all done in the name of flexibility. The attitude was summarised by my noble friend Lady Turner as the casualisation of labour. I too am most grateful to her for the opportunity to discuss the matter.

I should like to examine some of these terms and concepts I have mentioned as they apply to manufacturing. I believe that there is confusion between employers and government over what they mean by flexibility in the labour market. Many noble Lords opposite, I believe, think that industry needs a casualised workforce—which means a pliant workforce—in order to compete with low-cost labour countries.

Faced with international competition, what have the leaders of our manufacturing companies done? They have introduced new products, new equipment and new working methods which have led manufacturing firms towards continuous production. Much of that continuous production increasingly entails shift work. They have committed themselves to continuous improvement and the raising of standards to ever higher levels. They are committed to a programme of quality management. Their customers require them to invest in more and more, and better and better, information technology. They have cut costs by introducing information technology and eliminating layers of management. All this demands more skill, more training, more versatility, more commitment, more education and more initiative from management and from the workforce.

How do industrial managers release these qualities? Certainly not by fear, and certainly not by casualising work. I disagree totally with the noble Viscount, Lord Oxfuird. A strategy of labour flexibility involving the extensive use of casual part-time labour or sub-contractors is quite irrational in manufacturing. The facts do not support his thesis—

The Viscount of Oxfuird

Will the noble Lord give way?

Lord Haskel

No, I will not. This is a timed debate.

Production can be organised efficiently only with the use of full-time permanent shift workers in-house. The cost and managerial effort required to co-ordinate an alternative strategy of casual labour is totally counter-productive. People today recognise that no job is guaranteed for life and that they must continually upgrade their abilities and skills and adapt to new processes and products and the demands of a company. Employers would much rather adapt and train their existing workforce to meet new circumstances than hire a new one. I agree totally with my noble friends Lord Gladwin and Lady Dean that these practices send a positive message to the staff and encourage loyalty so that the best people stay with the company. That is what a business means by "flexibility". It is a kind of internal labour market within the company which adapts to change. What the Government understand as flexibility—easy hiring and firing—is entirely inappropriate and indeed is probably damaging to the ethos of the company. The objective is not to reduce wages to the level of those in China or Indonesia; it is to reduce our unit labour costs to the level of those in Germany and the United States.

An adversarial workforce, cowed by years of deregulation and unemployment and easily hired and fired, is only of value to a company with poor management and low investment. Is that the kind of company the Government are trying to encourage? Such policies may be applicable to service companies like supermarkets, but I am doubtful even of that. Most firms today are committed to a policy of continuous improvement in all sectors of their business. Does one achieve that with a casualised workforce? No. In those circumstances I suspect that flexibility means flexible hours which are adaptable to the lifestyle of the employee, as my noble friend Lady Lockwood explained, and the working of the company but managed with the same rigour needed for continuous production and shift working.

My noble friend Lord Houghton reminded us that the main area where casual employment seems to flourish is in the public sector and in the recently contracted-out sector. Zero-hour contracts, 51-week contracts, year-to-year contracts are now on the increase in those sectors. Because they face little international competition the hourly rate of pay is important and many think that insecurity at work makes for a pliant workforce which will work for low wages. That old-fashioned view only helps poor employers and stands in the way of progress and the introduction of new technology. It does nothing to help the introduction of continuous improvement in those sectors.

Perhaps the Minister will say that the Government's policies are vindicated because of our recent export performance. In response I would say that most of our successful exporters would reject those policies. That has certainly been my experience in industry. As to the example given by the noble Viscount, Lord Oxfuird, of the company in Germany, I am sure that devaluation of the pound had a considerable effect on that transaction.

Leadership in a business encourages best practice to drive the organisation towards ever higher standards. That means creating a workforce which is well educated and adaptable to changes in skills and circumstances. It does not mean a casual workforce which is easily replaced when circumstances change. Like most people in industry, we on these Benches believe that success in a modern economy does not come from a casualised workforce but from a confident, secure, well motivated and loyal workforce.

8.3 p.m.

Baroness Seear

My Lords, I join other noble Lords in thanking the noble Baroness, Lady Turner, for introducing this subject. I have a considerable amount of sympathy with many of the points she raised, in particular in relation to insecurity and the low rewards given to many part-time workers. I, for my part, accept that there will continue to be a considerable number of part-time workers. Professor Handy may not be entirely right, but there is a good deal in what he says about a future in which a relatively small proportion of people will have traditional careers and a larger number will have what he called "portfolios" made up of part-time work and other ways in which one's income is earned.

To make the situation for part-time workers tolerable they need to have the same rights pro-rata as full-time workers. They need to be treated in all respects as though they were full-time workers, but working under different conditions. That means the same kind of holiday and pension entitlements; the same kinds of opportunity for training and so forth. They should be on all fours with full-time workers.

I do not know if the noble Baroness, Lady Turner, said this, but I am confident that she will agree with me that in an industrial world in which change is happening rapidly and inevitably, as it is at the present time, it is extremely important that the modern reformed trade unionism, which has been so much put forward and helped by John Monks at the TUC, is brought into the discussions of how to handle the changes. We on these Benches agreed with many of the early changes in trade union regulation brought about by this Government. They were needed and overdue. But the Government have gone too far and it is important that trade unions be involved in the discussions on the changes which need to be made and in finding solutions to the difficult problems we are encountering.

However, I fear that that is the point at which I part company, regretfully in many ways, from the noble Baroness. What I felt from her speech and the speeches of nearly everybody else on the Labour Benches until we came to the noble Lord, Lord Haskel, (who greatly cheered me) is that it is all the fault of those wicked people opposite. I go along with a good deal of the criticism of them. It was said that if we went back to how it was in the 1970s, when there was a Labour Government, all would be for the best in the best of all possible worlds.

I remind the noble Baroness, Lady Turner, that there were quite a few flaws in the situation in the 1970s. For instance, 40 per cent. of our school leavers received no training at all. If they had received it, the situation today would be a great deal different than it is at present. It must be remembered that we had a winter of discontent; there was overmanning in industry and a number of other features which were holding us back. Our world trade had fallen to 6 per cent., and if it had gone on further it would have had a devastating effect on this country.

It is not simply a question of turning back the clock. We must look at what we are encountering and how we can meet it. Listening to the speeches from the Labour Benches I felt that they shrank from facing the horrible difficulties we are facing in the global economy of today. We are meeting heavy competition from around the globe. We are facing in the developing countries, with their vastly increasing populations, difficult challenges. We must face those challenges and work out co-operatively the best ways of doing so.

That is why I welcomed the suggestion—I believe it came from the noble Lord, Lord Carr—that we need to deal with what I see as an overwhelmingly difficult problem; that is, how we can maintain and improve our standards in a global economy when we are ill equipped to meet the competition facing us. I wish we could do it on the basis of consensus; that we could have an all-party approach to recognise the dangers and then to work out the changes which need to be made and the way in which they can be brought about.

As many others have said, the real issue is that we can only compete if we have a highly skilled, highly trained labour force which is extremely flexible in the sense that it is capable of turning its hand from one kind of demand to another, meeting the change successfully and confidently. That will be difficult because other industrial countries do not stand still while we are catching up on all that we failed to do in the past. They are advancing at the same time and that increases the competition.

We do not have that workforce; we do not have anything like it. We have an appalling backlog of untrained, under-educated people who are going to find it extremely difficult to fit into the global economy in which it is going to become increasingly more difficult for us to compete. We must put more money into training and re-training. The noble Lord, Lord Dahrendorf, made a useful suggestion as to how people could be financed through that continuous training.

In terms of the way of which we allocate resources in this country, I would put education and training way ahead of everything else because I think everything else depends on them. All the other services that we want depend on our being able to earn our living, and being able to earn our living depends on having the kind of labour force which we simply do not have at present. That is why putting back the clock is no good at all.

On my next point I am not speaking for my party, but, as the noble Lord, Lord Dahrendorf, indicated, he and I are very much at one. The noble Lord, Lord Carr, suggested—we had not in any way discussed this with him—that his mind was moving somewhat in the same direction. Part of the changes we need to face are changes in the whole way in which we run our welfare society or welfare state—"welfare society", as Beveridge once said he preferred to call it. Although I believe that the term has been somewhat besmirched of late, it would indeed be a much better way of expressing what we really want to do. The changes we now encounter mean looking at our system of employment and our system of welfare and social benefits. The two things are tied up very closely, as we saw when we discussed the Pensions Bill which recently passed through your Lordships' House.

I am a strong supporter of introducing something along the lines of a citizen's income, even if it is quite a small one, which gives people some basic fallback on which they can rely absolutely and which does not have the effect of discouraging them from getting into the labour market. I believe that the noble Lord, Lord Desai, would agree with me on that point. Do noble Lords realise how ridiculous our social benefits system is? If a man and wife are both unemployed and they have two children of school age, if they want to increase their family income by £20 they have to earn £170. Which of us in this House would go out and work to get £170 if we would get only £20? People are driven into the black economy. I do not blame them. That is where I would be under those circumstances. But that is what our ridiculous system is undoubtedly doing.

We all know that the income of the bottom 10 per cent.—the money they are supposed to have—has fallen in relation to what they had previously. But, according to figures which have recently been produced their expenditure has gone up. That can only mean one of two things. If their income has fallen but their expenditure has gone up, something very odd has happened. Either they have used their savings—but it is not really to be expected that people in the bottom 10 per cent. have a lot of savings—or else they are earning money somewhere else. That falsifies all the figures that we are quoting. We need a radical change, based on a citizen's income, and we need a radical change in the tax system. The noble Lord, Lord Carr, was surely right in saying that we should take the lower earners right out of taxation.

I would also say that the burden—here I am with the Government: no, I am not, because they are going back on what they themselves have said—of social benefits should not be put onto employers. We as taxpayers should be prepared to pay through taxation for the decent society we want. We are not doing it at the present time. It is ridiculous to lay charges for maternity onto employers. How many employers are responsible for maternity? I suggest a very small percentage. We have to review the whole thing. We have to review our attitude towards training. We have to review our attitude towards employment. We have to review our attitude towards our whole welfare society. And we need to do it on a co-operative, all-party basis.

8.14 p.m.

Lord Inglewood

My Lords, I very much welcome today's debate and thank the noble Baroness, Lady Turner, for initiating this wide-ranging discussion and all other noble Lords who have made such a noteworthy contribution. They will, I am sure, appreciate that I may not be able to cover every detailed point made but I shall endeavour to touch in very general terms on all ground covered and I shall concentrate, perhaps inevitably but not exclusively, on labour market matters.

What we are discussing matters very much to ordinary people. The need to have a job and to have one which gives satisfaction, security and self-esteem is something to which every Member of this House can subscribe. What is at issue is how that is best achieved.

My right honourable friend the Chancellor of the Exchequer, speaking last week at the Mansion House, acknowledged that there is an unease in Middle England about apparent job insecurity which casts a shadow across the land. The world is changing around us, and changing fast. Change engenders uncertainty and concern. That is not unique to Britain. Across the developed world people feel insecure about their jobs.

The pace of change in technology is rapid and shows no sign of easing. It has created vast new industries which even a few years ago would have been undreamt of. Interestingly, countries like the United States and Japan, which have the fullest use of high-tech, have the highest proportion of their populations in work. With these changes in industry and technology the pattern of world trade is changing too.

This year is the 50th anniversary of the end of the Second World War. Since then there has been a growth in prosperity unparalleled in the history of the world—a prosperity built on trade. We welcome this prosperity, not only at home but abroad as well.

When GATT was formed, tariffs averaged 40 per cent. They are now down to 3 per cent. We are now not just in a European but a world market-place. Trade has grown, prosperity has grown, and it has brought new jobs with it. However, two parallel trends have emerged as trade has grown and the pace of technological change has accelerated. First, there has been a massive upsurge in prosperity. Average real earnings for married male full-time workers, for example, are now 46 per cent. higher than in 1979. Real take-home pay has risen for all earnings deciles since 1979. But, secondly, the rapid pace of change has brought about a sense of insecurity. People recognise their growing prosperity but worry about whether it will last.

These worries are very real. We must not dismiss them, and the Government do not do so. Neither should we play on people's fears. It is quite wrong, as some are inclined to do, to make out that insecurity is worse than it really is. But, above all, we should not actually put jobs at risk through policies which really do destroy them—policies such as the national minimum wage in force in France, where unemployment among young people has now reached 28 per cent., and in Spain, where more than 40 per cent. of young people are now out of work. We do not want that here, do we?

Any policy which puts jobs at risk adds to insecurity. It is a cruel deception to pretend that policies such as those flowing from the social chapter and the national minimum wage which would raise the cost of employing people and reduce the competitive position of British firms will not put jobs at risk. As my noble friend Lord Oxfuird said, costs of employment have a major bearing on this. We must not have a system of labour relations and a business environment in which, instead of exporting our goods, we export our jobs which are so much wanted by those out of work here in our country.

There is one way, and one way only, to create security of employment and that is to create in Britain enterprises which thrive and prosper in the world as it is. Firms with the skills and knowledge to compete with the best in the world will win. Britain still has some catching up to do. In the 1970s we came close to terminal decline. Productivity was low, industrial relations were the laughing stock of Europe. That was symbolised across the globe in the Winter of Discontent in 1978–79—an uncompetitive Britain, with unemployment rising rapidly, inflation heading for 20 per cent. and uncollected rubbish piled in the streets of our cities. How much job security was there then? How could our citizens have top-class education, health and welfare services supported by such a gimcrack economy?

Perhaps the most stimulating part of our debate was that which was initiated by the noble Lord, Lord Dahrendorf, on the future of the welfare state. As we all know, we are now 50 years on from the Beveridge Report. What we have as our welfare state now is perhaps not exactly as he anticipated it would be. It is interesting that right across the political spectrum, and indeed completely outside of politics, there is considerable discussion about this very point. On the side of the Benches opposite has been the report of the Commission on Social Justice. From the perspective of the Benches on which I sit we have seen the Mais Lecture by my right honourable friend the Secretary of State for Social Security. I should like for a moment to touch on one or two of the themes that arise from this.

In the context of the remarks of the noble Lord, Lord Dahrendorf, about education, we welcome the comments of my noble friend Lord Carr. We are already seeing from this Government proposals for career development loans and we are considering that learning credits may have attractions.

Reference was made to poverty and supporting families on low incomes. Over recent years we have seen the development of family credit. I accept many of the problems which the noble Baroness, Lady Seear, mentioned, but I wish to make one particular point. As regards the comment of the noble Lord, Lord Desai, in that regard, it seems to us that he has got the cart and the horse the wrong way round. If there was not family credit there would not be the job. The person concerned would be entirely dependent on the state. Let us not forget that the nature of the system of family credit is to focus on the needs of individual families and to run that in parallel with the working of a flexible job market. It is interesting that the European Union has recently commented that the lack of a job is probably the largest single cause of low living standards and that low pay is a relatively minor cause of poverty.

The debate went further. The noble Lord, Lord Dahrendorf, spoke about what the noble Baroness, Lady Dean, referred to as "employer responsibilities". In the future how should we deal with people's pensions? Should individuals have insurance to cover various problems? These are issues which go wider than the perspective from which the noble Baroness, Lady Dean, approached the subject. She described them as employer responsibilities, and I do not gainsay that. But we ought at least to ask ourselves this question: in the world in which we are moving, how should these matters be dealt with? We should look wider than the employer as the source of everything.

I can assure the Benches opposite that we are quite prepared to take a leaf out of their book. If we find any policies emanating from publications on their side of the spectrum, we shall be delighted to incorporate them into our policies.

I was also very grateful to the noble Baroness, Lady Seear, for speaking about education and training. That was a topic, she may recall, which we debated briefly in the Statement on the White Paper regarding competitiveness. As she said then, there is a great deal of work that the Government have to do to catch up with the problems they inherited in the late 1970s. We have made a start. Fifteen years ago only 24 per cent. of our young people obtained five good GCSEs or better. It is now 43.3 per cent. Nearly 90 per cent. of 16 year-olds are now in full-time education. Britain now graduates more of its young people than any other country in Europe. The Government guarantee a youth training place for every 16 and 17 year-old not in further education or employment.

The Government are spending £1.9 billion in England on training and vocational programmes in 1995–96. In parallel, employers are spending about £20 billion. Caring about young people is not enough. There must he an economic framework capable of paying for the first-class education and training which our young people need and deserve. That will provide a first-rate workforce for the future. We have made a start but there will always he more to do.

Britain is steadily getting rid of the legacy of the 1970s. We now have one of the best industrial relations records in the world. Productivity growth is as good as or better than anywhere else in Europe. Unemployment is already lower than the European average and falling. It is down over 650,000 since recovery began. I must firmly refute the suggestion that the figures have been fiddled—a refutation which has been underscored by the Royal Statistical Society. Inflation is once again under control and down to levels last seen over 30 years ago.

We are very well placed to prosper in today's global economy. We export more per head than the Japanese and our exports are rising. Last year Britain exported more than at any other time in our nation's history. Some of our major industries are world players—pharmaceuticals, banking and finance. Sixteen out of the 25 most profitable companies in Europe are British. British Airways is the world's largest international passenger airline; and only yesterday we all read in The Times that British Steel has become the world's most profitable steel company.

We must encourage enterprise and self-employment. In the past 15 years the number of self-employed people—and in discussing the labour market we must not overlook them—has increased by over 1 million. Between 1979 and 1991, 900,000 new businesses were founded. It is from these new enterprises that most of the jobs of the future will come.

It is successful enterprise in our existing large and small companies throughout the kingdom which is the only real source of job security. Efficient, world-beating firms, large and small, create jobs not just in their own industries but, as the income they generate is spent in Britain's high streets, they also create jobs in other activities. On top of that, they pay the taxes which fund the public sector, in which one job out of five in this country is to be found. We must not forget their place in the labour market. I am sorry to disappoint the noble Lord, Lord Houghton of Sowerby: I was going to mention them.

Equally, the taxpayer is entitled to expect his political leaders to insist on quality in the service delivered with his money. That is in accord with the great traditions of our public service. The noble Lord referred to it. It will, of course, continue, as has been underscored in the recent White Paper Continuity and Change which confirms the Government's commitment to maintain the Civil Service as a good employer.

Two-thirds of the industries once in public ownership are now in the private sector. In 1979, those industries cost the taxpayer billions of pounds in subsidies. Instead of receiving subsidies, the privatised companies now pay taxes (£2.5 billion a year) contributing positively towards the cost of our National Health Service, education and the social services.

Of course, productivity changes have led to some reductions in employment. That is part of the necessary evolution for survival. But that is precisely why the Luddite route followed in the 1970s was so misconceived. Billions of pounds of taxpayers' money was poured into uncompetitive industries in order to save jobs. The jobs went anyway and the taxpayers' money was squandered. Subsidies, protectionism, all the artificial ways of keeping jobs and businesses alive in Jurassic Park simply postpone the evil day, as my noble friend Lady O'Cathain pointed out. Privatisation and competition create jobs and businesses which have a future because they are based on selling goods or services which real people want to buy with real money.

Let us for a moment turn to the facts about job security. First, as I said a few moments ago, the worst insecurity of all is the fear of losing a job and not being able to find new work fairly quickly. Rightly, government must help people facing the uncertainty of unemployment. Last year, for example, the Employment Service placed getting on for 2 million unemployed people in new jobs, over million of whom had been out of work for more than six months. I am not pretending that being out of work is easy, but it is worth remembering that, with the help of the Employment Service, two out of three people who lose their jobs leave unemployment within six months.

But the fear of unemployment—and it is a real fear—affects every country in the European Union. About 20 million of our fellow European citizens are out of work, which is 11 per cent. of the working population. The United Kingdom, of course, is not exempt. At over 2 million, unemployment remains high—far too high—but at around 8.5 per cent. it is well below the European average and falling.

The main reason for falling unemployment is, of course, that Britain, with its flexible, deregulated labour market, has been far more successful in creating jobs than any other major European country. That is why the European Community, the OECD, the IMF and the G7 all see a flexible labour market as an essential precondition for significantly reducing unemployment. Let us be clear about it: flexibility is not synonymous with Mr. Gradgrind. I hope that that will reassure the noble Lords, Lord Desai and Lord Haskel.

Here in our country 68 per cent. of the population of working age have jobs, which is more than in Germany, where it is 66 per cent., France, with 60 per cent., or Italy with 51 per cent. Of course, I accept that some of these jobs are temporary and that the number is rising. But surely that is what we would expect in the early years of recovery. Employers, as they always have, tend to look to overtime, part-time staff or temporary contracts until they are more confident that sales and output will continue to rise. Around 7 per cent. of Britain's workforce is in temporary work—not much higher than 20 years ago—and that is one of the lowest figures in Europe.

The noble Baroness, Lady Dean, commented on the recent claim from the TUC that UK workers worked the longest hours in Europe. However, it has elected to make selective use of the figures. It has concentrated on one particular area of full-time employees to make its case. It also tends to restrict its analysis to regulation-bound Europe rather than extending it to Japan and the United States where long hours are more common.

Equally, it is not the case that there is a great deal of dissatisfaction with part-time working—86 per cent. of part-time employees have permanent jobs. Indeed, within the European Union only Belgium and Luxembourg have lower figures. As one would expect, it is the more regulated economies which tend to have the worst figures. After 14 years of Socialist presidency, one French worker in 10 is on a temporary contract, and in Socialist Spain the proportion is nearly one in three, which corroborates the point that my noble friend Lady O'Cathain made. There is an inherent contradiction between the form of excessive rights and the substance of actual well-being.

Choice is important because we are talking in this debate about people, each with his or her own individual personality, ambition and aspirations. It is people who create wealth and achieve things, either as individuals or working together in successful enterprises. It is self-indulgent narcissism to think we can simply give out new rights and forget about the consequences. But excessive regulation and heaping costs on employers deter them from recruiting staff as sales and output rise.

We must get the balance between social protection and job creation right. The Conservative Party has a long and proud tradition of social concern and reform unsurpassed in British politics. We are proud of our history but must not rest on our laurels. No one advocates poor standards of social protection. As my noble friend Lady O'Cathain said, the labour market should not be a slave market.

But where it matters, we have high standards in the United Kingdom. Our health and safety laws are as tough as anywhere—and they will stay that way; so will our legislation on sex discrimination and on equal pay; and, unlike many European countries, Britain has tough laws, enforceable laws, on race discrimination.

What we must do, however, is to balance those bedrock rights with the need to preserve individual choice and let businesses grow. It is only by letting businesses grow that we shall create jobs and a sense of security based on real economic foundations and pay for the public services our fellow citizens expect.

We must not follow the kind of policies that mean that we shall rush like the Gadarene swine towards a world in which we have fewer and fewer jobs as we become less and less competitive, creating an ever-contracting industrial and commercial base. It is seductive to some indiscriminately to apply the maxim that it is more blessed to give than to receive, but it does not add up—and when it does not add up (as it did not in the 1970s), that destroys lasting prosperity and secure jobs.

The purpose of economic policy is to create prosperity and jobs. The test of those policies is whether they help business people to build up their businesses, expand sales and output and recruit more staff. That is the basis of this Government's policies—policies which add up to more jobs and more security for those in work and a greater likelihood of finding it for those without.

Baroness Turner of Camden

My Lords, as this is a timed debate, there is not sufficient time for me to reply to all noble Lords who have contributed, much as I would have liked the opportunity to reply to many of the points made, especially by the Minister. I am sure that the noble Lord will not be surprised to know that we on this side of the House do not agree with many of the claims that he has made for his Government's policy. However, there is not sufficient time for me to do that, and no doubt there will be other opportunities to deal with the subject in a great deal more depth.

It therefore remains for me simply to say to all those who have participated in the debate, "Thank you very much for your contributions". I am glad to note that there is some degree of consensus between us. We accept that there is a problem and that solutions to it will have to be found, although we may differ among ourselves about those solutions. Having said that, I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.