Unemployment and the Minimum Wage (Hansard, 11 June 1997)

§ The Minister of State, Department of Trade and Industry (Lord Clinton-Davis)
My Lords, there are still far too many people without jobs and skills and 884 Her Majesty's Government are committed to tackling this blight on the lives of so many and getting young people and the long-term unemployed back to work. The national minimum wage will be introduced at a sensible level taking into account the economic circumstances of the time and with the advice of the independent Low Pay Commission. It will help by removing the worst excesses of low pay, by improving our competitiveness and encouraging companies to compete on quality rather than low wages.

§ Lord Trefgarne
My Lords, I am grateful to the Minister for that reply. Though I do not agree with the benefits of the proposal he enunciated, can he say when he expects the new low wage arrangement to be brought into force and when we shall hear what the minimum wage is to be?

§ Lord Clinton-Davis
My Lords, the chairman of the Low Pay Commission has been appointed—Professor Bain. We are hoping that it will be able to start work round about the summer. That work, after due diligence in ascertaining the facts, will be brought before Parliament in due course.

§ Lord Dean of Beswick
My Lords, does not the Minister agree that the sooner we can put these provisions into operation the better? It would give hundreds of thousands of women who are extremely poorly paid and on shamefully low wages a decent standard of living for once in their lives.

§ Lord Clinton-Davis
My Lords, my noble friend is quite right. Too many people are suffering from excessively low pay. That is a blight on this nation's name.

§ Lord Ezra
My Lords, in his original Answer the noble Lord referred to skills training being required. Does he agree that at this stage in the economic recovery we are extremely short of skills, particularly in the area of high technology? Many firms are now having to recruit abroad. What urgent measures are the Government taking to overcome that problem?

§ Lord Clinton-Davis
My Lords, the House will be familiar with the fact that this Government are committed to that specific policy. I agree with the noble Lord, and he has heard this House agree with him on that issue on many occasions in the past. Now that we are in government we intend to give this matter the highest priority.

§ Lord Clark of Kempston
My Lords, does the Minister agree that his Government are extremely fortunate in inheriting a first-class, healthy economy? Not only is it the envy of Europe; it is the envy of all our competitors. Does he further agree that that is in sharp contrast to the shambles in the economy that the Conservative Government took over in 1979?

§ Lord Clinton-Davis
My Lords, no. No.

§ Lord Henley
My Lords, would the noble Lord like to take the opportunity of announcing to the House what 885 today's unemployment figures are? In case he does not have them, perhaps I can help him. There is a further fall of 18,400 which is a result of the policies that we pursued over the past 18 years. Bearing in mind the noble Lord's commitment to youth employment, can he comment on levels of youth unemployment in countries with a minimum wage such as France, Italy and Germany? How do they compare with this country?

§ Lord Clinton-Davis
My Lords, the Government take the view that the current level of unemployment is unacceptably high. It is 50 per cent. above the level in May 1979—a fact which the party opposite significantly ignores. In making comparisons, why does not the noble Lord refer also to the United States, Japan and other countries where minimum wage legislation is in place? That is another fact which he chooses significantly to ignore. However, I must remember that I am not supposed to be asking questions at this time.

§ Lord Campbell of Alloway
My Lords, is the Minister aware that the recommendation of the expert committee of the Council of Ministers puts the minimum wage at just over £5 an hour? Can he give an assurance that whatever recommendation his Government may accept it will be nothing of the order of that?

§ Lord Clinton-Davis
My Lords, surely it is appropriate to await the Low Pay Commission: the work that it undertakes, the assessment that it makes, the analysis that it undertakes and the conclusions that it reaches. I am certainly not prepared at this stage to pre-empt that decision.

§ Lord Henley
My Lords, will the noble Lord answer my question about comparisons with other countries?

§ Lord Clinton-Davis
My Lords, the fact that unemployment is higher in some countries is due not simply to a minimum wage but to a whole range of different factors. I have also adverted to the experience of two countries which the noble Lord seeks to dismiss from his calculations. I refer in particular to the United States, which has a rather healthy economy.

§ Lord Stallard
My Lords, my noble friend referred to the other factors involved. Is he in a position to give us an estimate of what effect the job seeker's allowance has had on the current reduction in unemployment?

§ Lord Clinton-Davis
My Lords, that is one of the factors that has been omitted from a proper calculation of the unemployment figures. My noble friend is right to draw attention to that factor.

§ Earl Russell
My Lords, may I take it that the Minister agrees with the view I have often heard expressed by his colleague, the noble Baroness, Lady Hollis of Heigham, that jobs paying below a likely minimum wage owe their existence to government subsidy in the form of in-work benefits? While I would not expect him to hold the view held by the ideological 886 bedfellows of the noble Lord, Lord Trefgarne, that all jobs created by government subsidy are bogus jobs, does he agree that this is not a particularly carefully targeted subsidy?

§ Lord Clinton-Davis
Yes, my Lords.

§ Lord Acton
My Lords, is the Minister aware that the United States of America adopted a minimum wage in 1938 and that unemployment there dropped annually for the next six years? Is he further aware that the most recent increase in that minimum wage was from four dollars and 25 cents to four dollars and 75 cents in October of last year and that unemployment has come down since then? Bearing those facts in mind, does he agree that a minimum wage does not necessarily lead to an increase in unemployment?

§ Lord Clinton-Davis
My Lords, I am grateful to the noble Lord, who has quite correctly drawn the inference that he has. It seems extraordinary that the party opposite—I do not know what the Leader of the Opposition is iterating from that sedentary position, but I do not even care—does not seem to have become aware of the fact that it lost an election in which we placed this issue fairly and squarely before the electorate and received its commendation.

§ Lord Boardman
My Lords, does the noble Lord therefore disagree—

§ The Lord Privy Seal (Lord Richard)
My Lords, I think we should move on to the next Question.