Labour has chosen a natural conciliator in the shape of George Bain as the man to oversee the introduction of its minimum wage. Huw Richards asks him how he feels about trying to reconcile the captains of industry with the comrades of the TUC

George Bain is now only metaphorically an academic heavyweight. Any claim to be one in the physical sense has been shed, along with five stone, over the past two and a half years. Whether physical transformation has made Professor Bain mean as well as lean will be revealed next year when, as chairman of the Government's Low Pay Commission, he plays the leading role in fixing the first national minimum wage.

Bain, 58, the out-going principal of the London Business School, did not seek the job and says he knows nothing of the decision-making that led to it being offered. But it was always likely that Labour would use him in some capacity following his work as chairman of the commission on wealth creation, set up by the Institute for Public Policy Research, the think tank closely linked to the party. The commission's report, Promoting Prosperity, published shortly before the election, included a minimum wage proposal.

By taking the post Bain has accepted responsibility for one of the key elements, symbolic as much as economic, of the Labour Government's programme. Labour has to prove that, while accepting much of the freemarket revolution of the 1980s, it can still deliver on more traditional preoccupations of deprivation and social justice, that it can materially advance the position of the poorest members of society without provoking employers and the City back into knee-jerk conservatism.

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It will take a talent for squaring circles and being, if not all things to all men, at least capable of persuading a fair proportion of his competence and good faith. His selection went down well with both sides of industry. "I was pleased that the Trades Union Congress, the Confederation of British Industry and the Institute of Directors all welcomed it," he said. The TUC could point for reassurance to his record as an industrial relations academic at Oxford and Warwick, while their business counterparts were happy to welcome someone who has spent the past 15 years running business schools.

It might be asked why Britain should have to call on a Canadian, albeit one who has lived here for 35 years, to address a serious national issue. Bain, those 35 years notwithstanding, retains his native citizenship, accent and the distinctive Canadianism of pluralising "anyway". But he has found that there are advantages to being a kind of outsider in Britain. "British people are quick to categorise each other according to how they sound. My advantage is that people here cannot tell whether my father was the president of Canadian Pacific Railways or a carpenter for them - which is actually what he was."

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Unclassifiability as either "us" or "them" is reinforced by a temperamental preference for conciliation over confrontation - a trait noted by his wife Gwynneth after a member of LBS staff raised the question of what he might do on leaving the principalship (he has since been appointed vice chancellor of Queen's University, Belfast) at the end of this year. "The suggestion was that I might be a chat show host. I told Gwynneth, and she said 'that's the last thing you could be' and she is right. My instinct when confronted with two people with differing points of view is to find some way of reconciling them - a good chat show host would encourage them to argue."

Balance and reconciliation will be key elements in the work of the LPC. There is, he readily concedes, a strong moral dimension to the decision to create a minimum wage. But the level at which it is set next year will be the outcome of hardheaded calculations on the likely economic implications of the rate. It will be a serious political decision as well. Business is likely to argue for a rate at Pounds 3.50 per hour or lower, with the Institute of Directors arguing that even Pounds 3 will lead to job losses. Union bidding will start at Pounds 4 and above, with public sector union Unison calling for Pounds 4.42. The most recent Labour Force Survey showed 3.2 million people earn less than Pounds 3.50 an hour, 4.8 million earn less than Pounds 4.

He had a taste of the arguments, and critical reactions, when working on the IPPR report. He credits IPPR director Gerry Holtham with persuading the committee's businessmen to sign up for the idea of a minimum wage by pointing out that in its absence exploiting employers can expect the taxpayer to top up low pay through the benefits system. The report also notes that every other European Union state has a statutory minimum.

Michael Heseltine denounced the IPPR report as a political stunt, but his intervention had the paradoxical effect of winning it publicity and increasing public awareness of growing business support for Labour.

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Bain is unimpressed by suggestions that there might be variable regional rates - noting that the vast, federal and much more diverse United States gets by on a single national hourly rate - and says: "It will be a tough economic issue, in which we have to consider the employment implications of any rate we set. There will be trade-offs." But any jobs lost, he has argued, are likely to be those Britain is better without. "I don't think that the future for Britain is to try to compete with the low-wage economies of the third world."

Work for the LPC will have something in common with the industrial and conciliation processes in which he has assisted for much of his time in Britain. "I find it fascinating and challenging to try to find a means of bringing two parties to a dispute together. But the people who really put something on the line and deserve credit when that happens are the people who have to compromise. As the mediator, your only real concern is to find a settlement. The personnel manager and shop steward have to put themselves on the line to sell it to the people they represent."

A personal interest in conciliation was reinforced by watching British industrial relations in the 1960s and 1970s. It was the chance to study our famously confrontational system that brought him to Britain in the first place in 1962, as a postgraduate student at Oxford. "Industrial relations were dreadful. Whatever my view of what has happened to Britain in the past 15 years or so, there is no way I would want to return to the way things were in the 1960s and 1970s. But of course it was marvellous if you wanted to study industrial relations as an academic."

His roots also determined his broad political outlook - he recently (THES, June 20) wrote about a socialism based on equality of opportunity, freedom and fellowship of the sort he observed among the railway unionists of his youth. Those principles survived his academic shift from running the University of Warwick's industrial relations unit to taking over its business school in the early 1980s. It is one of the ironies of recent academic history that business schools, popularly identified as quintessentially Thatcherite institutions, were often led by Labour supporters during Thatcherism's triumphalist years. That career shift was, like the LPU job, unsolicited. But it illustrates another consistent trait - Bain tends to end up running things. "People obviously see me as having a talent for it," he says. His attitude to his new trade has remained that of the sceptical outsider rather than the enthusiastic convert - he used to define management studies jokingly as "casting false pearls before real swine" and is dismissive of the "evangelical school" in the subject which, he thinks, is "wont to make exaggerated claims for basic insights".

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He denies ever having wanted to be an academic manager, but admits to enjoyment of running things and to a highly useful characteristic in any modern manager: "I love change". There is much to be said for being boss when change is about, as one friend reminded him. "I said that I couldn't understand why some people didn't enjoy change and he said 'It's easy for you to say that. You are normally controlling the change, so it doesn't look nearly as threatening to you'."

One significant change in his time at LBS has been the introduction of performance-related pay for academics, himself included. The consequence has been that it pays the highest salaries of any British institution. The irony that the fate of the low paid is in the hands of a man credited with earnings of Pounds 136,000 in LBS's last annual report has been pointed out by one national newspaper. Bain declined the fee offered along with his LPC duties - which he reckons will take him two days a week until Christmas, one day a week afterwards. Other commissioners will also be unpaid. "I didn't think we could be seen to profit from working for the low paid," he says.

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While some heads of institution close to the top of the annual THES pay survey have shown signs of either embarrassment or irritation at having their income displayed, he has expressed cheerful, joking disappointment at being constantly pipped to the very top. He is unconcerned that his pay at Queen's will be about 25 per cent lower. "I have always taken the view that you are a fool if you change jobs, or refuse them, purely on the grounds of money. But I'm well aware that attitude is a middle-class luxury. My father could not possibly have taken a substantial pay cut, or given up one job with no certainty of another."