Letter: High labour costs for EC employers

Sir: You reported (Politics & Policy, 14 May) that my comments to the Scottish Conservative and Unionist conference on 13 May angered representatives of Daimler-Benz and were challenged by one of them as 'clearly ill-informed'.

I would like briefly to clarify those comments and show that, far from being 'ill-informed', they appear to touch upon concerns close to the hearts of employers throughout the European Community.

Daimler-Benz is only one of a number of the EC's leading household names that are shifting production outside the Community. In April, Daimler-Benz announced its intention to invest pounds 430m in a project to build a four-wheel-drive vehicle in America - the first time it has produced a car away from its German base.

Comments by a company spokesman about emphasising 'Made by Mercedes-Benz' rather than 'Made in Germany' have also been widely reported. More generally, it was noteworthy that a survey in Die Welt earlier this year revealed that 55 per cent of German-based multinationals had moved, or had plans to move, some of their operations out of Germany because of labour costs.

All EC employers are already concerned about the impact of high labour costs on EC competitiveness, as recent statements from the main Community employers' organisation, Unice, have made clear.

The British government shares this concern. This is why the UK has consistently made clear its views that the draft Social Chapter, with its emphasis on increased Community regulation, risks damaging UK and EC competitiveness in world markets - by increasing costs and reducing flexibility.

Yours sincerely,

MICHAEL FORSYTH

Minister of State

Department of Employment

London, SW1

17 May