National Minimum Wage (Hansard, 26 June 1997)

§ Lord Haskel
My Lords, it is the Government's intention to introduce a national minimum wage. As we said in our manifesto, this will be set sensibly and apply throughout the United Kingdom taking account of the economic circumstances prevailing at the time. The independent Low Pay Commission will 1642 recommend to the Government the level at which the minimum wage might be introduced. Before formulating its recommendation the commission will undertake a wide-ranging consultation exercise and take account of the needs of workers of all ages.

§ Lord Henley
My Lords, while I thank the noble Lord for that Answer, can he give an assurance that when the commission conducts this work it will look at the evidence from other countries, and in particular the evidence from Japan? Japan has relatively low unemployment and the minimum wage varies across the country. As I understand it, it is as low as 17 per cent. of the national average wage in metropolitan Tokyo. Will he compare that situation with the figures in France where there is a relatively high national minimum wage of some 58 per cent. of average national earnings and as a result there is high unemployment with youth unemployment double what it is in this country?

§ Lord Haskel
My Lords, it is wrong to attribute the comparatively high level of youth unemployment in some countries to minimum wage legislation. High unemployment levels within a particular country are the product of a number of different factors. The noble Lord may be a little selective in the figures that he has mentioned. If he were to study the figures in the United States he would see the impact of the minimum wage on youth unemployment there.

§ Lord Campbell of Alloway
My Lords, with respect, is the noble Lord's assessment of this situation entirely realistic? Is he assuming that the commission will set disparate minimum wages in different countries? Perhaps he would agree that the commission will set a minimum wage and that it will be done by subsidiary legislation with supra-national effect to impose it upon a single European labour market. Is not that the reality of the situation?

§ Lord Haskel
No, my Lords. The duty of the commission will be to recommend to the Government a minimum wage for the United Kingdom. As I said in response to the Question, the commission will undertake a wide-ranging consultation exercise and will consider the needs of workers of all ages and in all parts of the country.

§ Lord Rochester
My Lords, does the noble Lord agree with the recently appointed chairman of the Low Pay Commission that whatever level the minimum national wage is set for adults, there is a strong case for setting the rate for young workers at a lower level? Would that not both encourage more young people to stay in full-time education and also act as an inducement to employers to offer more of them jobs?

§ Lord Haskel
My Lords, I am inclined to agree with the noble Lord, but I cannot anticipate what the Low Pay Commission will decide. Part of its remit will be to look into that very point.

§ Lord Monkswell
My Lords, can my noble friend assist us as regards the questions that the Opposition asks the Government about minimum wages? On what 1643 basis does it formulate its position? Is the Conservative Party in favour of poverty wages or is it in favour of the public purse subsidising bad employers?

§ Lord Haskel
My Lords, I cannot answer for the Opposition. One of the purposes of the minimum wage is to remove the subsidy of family benefits as they are used to subsidise low pay.

§ Viscount Ullswater
My Lords, is the noble Lord aware that the third report of the Competitiveness Advisory Group set up by the European Council of Ministers, on which the noble Lord, Lord Simon of Highbury, sat when chairman of BP, stated, Modernisation of the labour market and the fight for more employment in Europe is not social policy: it is essential for our long-term economic competitiveness"? The group said that, social legislation … should be subjected to a more intensive cost-benefit analysis and that minimum wages may do more harm than good". Does the noble Lord agree with that report and with his noble friend, or not?

§ Lord Haskel
My Lords, I think that the noble Lord is being a little selective. From my memory of the comments made by my noble friend Lord Simon, he also said that it depends at what level the minimum wage is set. He did not say that the minimum wage itself was either good or bad.

§ Earl Russell
My Lords, will the Minister remind the noble Viscount, Lord Ullswater, that there is a convention that committees on which we sit attempt to produce unanimous reports and that a great many of us on both sides of the House have sat on committees which have produced reports for which in our individual capacity we should not be called to answer?

§ Lord Haskel
My Lords, I entirely agree with the noble Earl.

§ Viscount Waverley
My Lords, what will be the impact on competitiveness when producers pass on additional costs as a result of a minimum wage?

§ Lord Haskel
My Lords, there is no proof that the minimum wage creates increased costs. The research seems to indicate that firms tend to compete on the excellence of their products and services rather than on the wages that they pay to their staff.

§ Lord Stoddart of Swindon
My Lords, will my noble friend give the assurance that a national minimum wage will in no way impair free collective bargaining in industry and that the Government will not interfere if, in the public service, trade unions make claims to maintain differentials?

§ Lord Haskel
My Lords, the whole question of differentials is a little outdated. Most firms and organisations today have pay scales and pay bands 1644 and people are paid according to their skills, abilities and knowledge. The whole concept of differentials lies in the past. We may be discussing here a matter which is yesterday's problem.

§ Lord Dixon-Smith
My Lords, is the House entitled to assume from the answers that we have heard that the Low Pay Commission will have no constraints put upon what it recommends, and that the Government will accept the recommendations whatever they may be?

§ Lord Haskel
My Lords, no, one cannot make that assumption. The Low Pay Commission seeks people to serve on it who are independent, not those who represent various sectors of interest. The Low Pay Commission will reach a decision. The Government will listen to the advice of that low pay unit. However, the Government have every confidence in Professor Bain. Indeed, the noble Lord may have noted that advertisements appeared yesterday inviting people to apply to serve on the Low Pay Commission.