LETTERS: How the Labour Party's minimum wage will create jobs

The shock-horror figures of UBS chief economist Bill Martin ("City warns minimum wage could destroy 250,000 jobs", Business, l9 May) are based on assumptions about pay levels and differentials that do not reflect Labour policy.

The next Labour government will establish a Low Pay Commission, on which employers, trade unions and independent members will sit. This will set the minimum wage.

The minimum wage will benefit low-paid workers, such as cleaners and caterers. It is fantasy economics to suggest that skilled manufacturing workers will demand corresponding pay rises. They, along with everyone else outside the Tory party, are appalled by poverty pay.

The minimum wage will allow companies to compete on quality rather than low cost. It will increase the spending power of the lowest paid, thereby increasing demand in local communities. That is why, between 1970 and 1992, France created twice as many, Germany four times as many, and Italy six times as many jobs as the UK. They all have a minimum wage.

There is an overwhelming business case for a minimum wage, not least because the cost to taxpayers, including employers, of in-work benefits to subsidise poverty pay is almost pounds 3bn a year and rising; pounds 6.3bn has been spent on family credit alone since 1990-91. That means employers who pay fair wages, are required to pay additional tax to support those who try to undercut them through low pay. No wonder more and more companies support the principle of a minimum wage. UBS may not be among them, but they could at least reflect our policy accurately in future.

Ian McCartney MP

Shadow employment minister

House of Commons