The Auckland Star: WITH WHICH ARE INCORPORATED. The Evening News, Morning News The Echo and The Sun. FRIDAY, SEPTEMBER 26, 1930. THE WAGES PROBLEM.

Auckland Star, Volume LXI, Issue 228, 26 September 1930, Page 6

The Auckland Star: WITH WHICH ARE INCORPORATED. The Evening News, Morning News The Echo and The Sun.

FRIDAY, SEPTEMBER 26, 1930. THE WAGES PROBLEM.

For the cause that lacks assistance, For the wrong that needs resistance, For the future in the distance, And the good that we can do.

One can sympathise with the farmer and the manufacturer in their difficulties, without approving of the wages remedy they put forward to the Government yesterday. The facts and figures cited are certainly impressive. The sheep farmer and the dairy farmer are receiving much less than they did for their products, but, on the whole, wages remain as they were. The remedy of the employers, rural and urban, as urged upon the Government yesterday, is to reduce wages. The Arbitration Court should have, so it is proposed, the power that it w T as given in 1921, to make "general orders" in respect to wages, based upon the cost of living and the general economic condition of the country. It was explained that "at the moment" the demand Avas not for a reduction of wages, but for machinery by Vhich it could be brought about. There is no doubt, however, that reduction is in the minds of those represented by the deputation, as the easiest, and indeed the only, way out of the country's economic difficulties.

The problem, however, is much more complicated than may appear at first sight. To lower costs is obviously ne.cessary for our economic 'welfare, but wages are not the only cost; and one clanger of attacking them like this is that many persons are led to believe that they are the only cost worth considering. Some of the wages the farmer pays are not governed by the Arbitration Court, and he can make his own terms with the workers. Moreover, while it is quite true that the farmer, on whose earning power we all rest, is in serious difficulties owing to the fall in prices of his product, he must also be benefiting by the fall in prices of what he has to buy. To mention only two articles, machinery and manures are both cheaper. Further, to attempt to regulate wages by prices might produce an instability that would not be good for business or for the wage-earner. The lot of the farmer might be considerably better a year hence, but could the wage-earner be sure of having his wages raised as quickly as they were lowered? Employers have said a good deal in the past about stability. The worker also has an interest in that condition.

Wage-earners would probably be quite prepared to take less "wages if they could be certain that the cost of living would fall proportionately, and they might also make it a condition that all other classes should make a proportionate sacrifice. But would the cost of living fall proportionately and quickly? When prices rise there is a tendency of wages to "lag"; if wages fell, the cost of living would also "lag." As the Acting Prime Minister said yesterday, the workers are naturally concerned about their condition during the period of readjustment. It may be asked, for example, whether the wheat-growing farmers of the South Island would consent tea reduction in the controlled price of wheat, or if they Avould expect the man on the basic wage to take less but pay the same price for his bread. The basic wage-earuer must be considered. Hoav he manages to exist on his present wage is a mystery to many. As to the effect on secondary industries, a little more employment might, result, but high wages are not the main cause of unemployment. The main cause is that capital is shy; much money is lying idle that would be invested in industry if there were more confluence. The cause of this shyness is the general fall in prices. It follows, therefore, that it is by no means certain that an all-round reduction in wages would benefit industry to the extent expected. On the other hand, it would reduce the purchasing power of the community and depress the standard of living. Any such proposals, therefore, must be considered with extreme care.