§ Mr. Knoxasked the Chancellor of the Exchequer what estimate his Department has made of the number of jobs that will be lost if the increase in overall earnings during phase 4 is (a) 5 per cent. (b) 8 per cent. (c) 10 per cent., (d) 12 per cent., (e) 15 per cent., (f) 20 per cent. and (g) 40 per cent.
§ Mr. Denzil DaviesThe recent public expenditure White Paper (Cmnd 7439) published three illustrative projections assuming different earnings paths over the period to 1982. These are projected levels of GDP and not of employment, although one would expect the two to be related. The White Paper emphasised the limitations of the projections including the insecurity of some of the econometric relationships involved, such as that between output and employment. It also said that more elaborate estimates would not have been fruitful. However, 561W the projections clearly illustrate the general tendency for higher rates of increase in earnings to feed through into higher inflation, thus reducing the growth of output and employment through its effects on saving, investment and external trade and on the stance of fiscal and monetary policy.
The effects of annual increases in earnings of 20 per cent. or more have not been estimated. They could have far-reaching and damaging consequences throughout the economy.