Young People

Part of Orders of the Day — Wages Bill – in the House of Commons at 4:42 pm on 15 May 1986.

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Photo of Kenneth Clarke Kenneth Clarke Paymaster General (HM Treasury), Secretary of State for Employment 4:42, 15 May 1986

One interpretation of the Council of Europe's convention produces the figure of 8 million to which the hon. Gentleman referred and to which his policies, set out yesterday, are most especially directed. The figure of 70 per cent. of the wage level, which the Labour party would restore to young people, would produce a comparatively low figure as a legal minimum in some industries. However, in Germany, the proportion of young people's incomes to that of adults is much lower. When people take their first job they have little to offer but enthusiasm and the hope of acquiring skill and experience. They must expect to receive lower pay in relation to adults and in comparison to what they will receive when they have acquired their skills.

The hon. Member for Kingston upon Hull, East objects to our debating his policies, but, with respect, we are discussing the subject matter of the debate, which is the new clause put forward by the Labour party. The Labour party advocates that we should have a statutory minimum wage level for young people. It is plainly part of the policy—the fair pay policy—which was set out by the hon. Gentleman and by the hon. Member for Ladywood to drive up the pay costs of British industry on a substantial scale. In our opinion, that would sacrifice many jobs.

Our policy is quite straightforward. The earnings taken out of industry by any workers have to be based on the value that the worker can put into that industry. The success of the worker helps his company to succeed in the market place, including the world market place. Higher wages are a desirable objective for most people, but they must come from better performance. Our latest proposal is a concept of profit sharing. This would encourage industry and those working in a particular industry, and thus the rewards are more closely linked to the success or otherwise of the enterprise.

The young person who is trying to take his or her first step in the labour market certainly needs to be protected, and I agree entirely with such protection. In my view, they need to be protected against the risk of hen priced out of a job. That is a risk which they would run if the wages councils provision, as advocated in the new clause, was adopted, or a national minimum wage, as canvassed by the hon. Member for Kingston upon Hull, East, was adopted.

I ask the House to reject new clause 1 and accept the link between pay and employment. If the Labour party rejects that link, it will be folly in the extreme. The hon. Member for Ladywood tries to refute any link between present employment and pay by citing the figures which she always cites. She argues that since 1979 there has been an increase in youth unemployment. These figures take in the full winds of the recession since 1979, but youth unemployment has not risen by as much as it has in other sections of the population. The fall in earnings of young people vis-à-vis adults has taken place only since about 1982. Ever since young people have followed the policies encouraged by the Government and taken a lower proportion of the adult wage, the percentage of young people unemployed has decreased. The position of young people has improved.

5.15 pm

Between April 1982 and April 1985 the average annual increase of earnings for the under-18s has been 5·7 per cent., while for those aged 18 and over it has been 8 per cent. The number of unemployed under-18s as a proportion of the total unemployed has fallen. In January 1983 it was 6·9 per cent., in January 1984 it was 6·4 per cent., in January 1985 it was 5·9 per cent. and in January 1986 it was 5·5 per cent. I am pleased that the overall unemployment rate for under-18s has fallen.