Letter:Minimum wages destroy jobs

Click to follow
The Independent Online
From Mr Phillip Oppenheim, MP Sir: Your article "Tory claims on minimum wage `disproved' " (19 December) suggests that the Government has been disingenuous in claiming that a national minimum wage would lead to a fall in the number of jobs.

Denis MacShane's argument that a number of other countries with minimum wage mechanisms have seen a higher growth in employment than in the UK ignores important caveats in the figures provided, and in one case quotes an important figure incorrectly. The

facts are that those countries quoted which have seen a significant growth in employment have, in the main, very different types of wage-fixing mechanisms to the sort of national minimum wage that Labour is proposing.

In the US, the minimum wage is currently set at the extremely low level of $4.25 per hour - moreover, despite coming to power committed to raising the minimum wage, President Clinton has followed the example of his predecessors by not doing so, clearly because of fears about the effect on jobs. In Australia, wages are set at state level; in Japan, there are different industry rates; in both countries, the level is very low.

France and Spain, which are the only EU countries with a national minimum wage of the sort Labour proposes, have significantly higher unemployment rates than the UK: indeed, youth unemployment is well over twice as high in Spain, and in France it is overone-and-half times as high.

It is not surprising Mr MacShane finds UK employment performance poor compared with other European countries, as he uses the wrong figure. Mr MacShane claims that employment growth for the UK was 1.5 per cent between 1980 and 1990; the actual figure was 6.4 per cent (recently revised up to 6.8 per cent), available from Table 4.0 ("Total Employment") from the OECD's "Labour Force Statistics 1972-92", published in 1994. This was also the main source for other OECD countries. When comparisons

are based over the economic cycle (1979-90) - the correct way of assessing employment growth - the UK rate of job creation was faster than in France and Spain.

The Government believes that the only sustainable way to improve real pay is through enhanced education and training, together with a framework of monetary stability, low inflation, and a climate for successful investment and enterprise.

Yours sincerely, PHILLIP OPPENHEIM Parliamentary Under Secretary of State Department of Employment London, SW1