Tory reforms `driving down wages'

The labour-market reforms of Tory years have conspired to drive down the wages of the low-skilled, according to a study yesterday from an influential think-tank.

Higher unemployment tends to put downward pressure on wages mainly in sectors which have many low-skilled workers whose pay is particularly low, it states. But changes made during the 1980s have had an additional impact, said the study from the National Institute of Economic and Social Research. They have made it harder for the unemployed to avoid taking low-paid jobs and made it easier for firms to lay off workers, the institute said.

The author of the study, Bob Anderton, said: "My argument is that in the long run it is not really good for the economy. [Low-paid jobs] are basically bad jobs, a lot of them. Real wages for jobs taken by the unemployed have hardly risen since 1979."

During the boom of the late 1980s, when unemployment fell rapidly, wages began to increase rapidly. But Mr Anderton added. "In this recovery, wages are not responding so much to this fall in unemployment. There has been some kind of fundamental change in the relationship between unemployment and wages."