Letter: Minimum wage: Tory mythology

From Mr Chris Pond

Sir: Before the last general election, the Government told us that 2 million jobs would be lost through the introduction of a minimum wage. A few months ago, the figure changed to 800,000. Now Ian Lang tells us that 950,000 jobs would be lost (Another View, 13 September). Confused? They are.

Treasury officials admit that such estimates are "entirely arbitrary". Mr Lang himself admits his estimate is "based on the assumption that just half of the pay differentials are restored". In other words, it assumes that Douglas Hurd will enjoy an automatic increase of pounds 60,000 in his new bank job because a hairdresser gets a pounds 4.15 minimum wage.

The CBI's own guesstimate of job losses is one-sixth the size of Mr Lang's, and in a recent survey, 86 per cent of personnel directors reported that a minimum wage at this level would not cost any jobs at all. The OECD, from which Mr Lang seeks to draw comfort, tells us that "most empirical evidence points to rather modest effects [of minimum wages] on total equilibrium employment". In fact, many recent studies suggest that minimum wages help to create employment, by stimulating greater productivity, efficiency and consumer demand.

The lowest paid now earn less in real terms than in 1975, less in relative terms than at any time since 1886. As a result, low pay is the single most important cause of poverty in Britain. We understand that Mr Lang has been President of the Board of Trade for only a short time. But he owes it to the millions facing hardship through poverty pay to get the facts straight, rather than to dismiss their experience as "mythology".

Yours sincerely,

Chris Pond

Director

Low Pay Unit

Social Charter Campaign

London EC1