INCREASES IN WAGES

Press, Volume LXXXV, Issue 25738, 25 February 1949, Page 8

INCREASES IN WAGES

ECONOMIC EFFECT ON COMMUNITY MR HOLLAND SPEAKS AT HAMILTON (P.A.) HAMILTON. Feb. 24. “This will only make the matter worse, unless it is accompanied by increased production, which alone can increase living standards,” said the Leader of the Opposition (Mr S. G. Holland), in an address to the Hamilton Junior Chamber of Commerce today, when he referred to the increased cost of living and efforts by a section --©f the workers to secure substantial -wage increases. The worker and women, he said, were beginning to realise that higher wages did not provide the answer to their living cost problem. There were several factors that prevented the worker from being better off with wage inflation, the main one being the Minister of Finance (Mr Nash), with his double-headed penny. “First he has his cut of the increase by deducting Is 6d in the £ for social .security; then he has another cut of *2s lOd in the £ for income tax where * it is payable,” said Mr Holland. “Mr LNash gets another cut at the other end loading 20 per cent, on to many lines by way of sales tax. A wage in--2.5? crease to award workers starts an all--round increase in all costs, and that IZ is tantamount to cuts in the purchasing power of all pensions, wages, incomes, and savings. “Stable Price Level Needed” ‘The greatest need is for a stable internal price level. This process of wages chasing prices is the very reverse of that. Prosperity is .not deterby the quantity of money in circulation, but by how much that money can buy. If the wages of the boot and shoe maker increase, then the price of boots and shoes must in- j crease. The increase is received to a greater extent by the worker because the wholesaler and the retailer both add their respective margins on top of the original increase. “It is not just the cost of production that goes up, but all other distribution costs go up too. The costs of material rise, overhead costs increase, all transport costs increase, and the cost of the Government goes up. because if a privately-employed worker gets an increase, it would be manifestly unjust •9 leave publicly-employed people out. “It would be safe to say that by the time Mr Nash gets his cut out of the increase by way of social security tax. income tax. and sales tax, and by the time the wholesaler and the. re- i tailer have added their authorised margins, it means in many cases that for every 20s increase received by the worker, the prices of goods increase by 305.” _ _