§ Mr. Maplesasked the Chancellor of the Exchequer what links the Treasury model assumes between real wages or total real employment costs and total employment; and if he will make a statement.
§ Mr. Peter ReesThe estimate of the relationship between real wages and employment, which my right hon. Friend the Chancellor of the Exchequer has given the House on 30 October at column 1183, was based on a 121W survey of academic studies and on the results of simulations of the Treasury model. Details of the evidence, including the simulation results, will be published in the new year.
§ Mr. Maplesasked the Chancellor of the Exchequer what is his estimate of the link between total employment costs and total employment in terms of jobs created or lost for decreases or increases in such costs.
§ Mr. Peter ReesMy right hon. Friend the Chancellor of the Exchequer has already given the House his estimate of the additional jobs that would result, over a period of years, if real wages had been held constant between 1981 and 1984–30 October, column 1183. It was based on evidence that a sustained 1 per cent. fall in the average level of real employment costs will, in time, lead to an increase of between 0.5 and 1 per cent. in employment.