Unions Seek General Wage Rise Of 7.6%

Press, Volume CVIII, Issue 31627, 13 March 1968, Page 26

Unions Seek General Wage Rise Of 7.6%

(New tealand Press Association)

WELLINGTON, March 12.

The trade union movement had been forced to apply for a general wage increase of 7.6 per cent, the president of the Federation of Labour (Mr T. E. Skinner) told the Arbitration Court today.

He said the union movement had been forced into it by circumstances over which it had no control and which the Government was not prepared to control by positive means.

Mr Skinner said if it had been possible to find some other means of safeguarding the interests of wage and salary earners, the unions would have used it in preference to the Court.

The wage order application was lodged by the F.O.L. on behalf of the New Zealand Carpenters’ and Related Trades Union. Hearing the application are Judge A. P. Blair and Messrs W N. Hewitt, employers’ representative, and Mr A. B Grant, workers’ representative. Mr Skinner said that the application was brought not because unionists thought the time propitious but because of circumstances over which they had no control. The court approach, from past experience, was likely to bring the “usual ill-informed and hostile” comment from various sections of the community. He said that economic measures in 1967 were loaded in favour of others and against the wage earners—who found that the value of their wages had been eroded, that living costs had gone up accordingly, and that earnings and actual opportunities for employment were shrinking. The Government asked them to believe that these measures were necessary because of a sudden fall in wool prices and a corresponding unexpected fall in export income.

It was put in various ways by various community groups that the burden of the deflationary actions of the Government was being equally shared by the whole community. Some groups suggested that the wage and salary earners were the least affected by these actions and that the burden was being carried by export producers. Wool Prices These statements were nothing more than excuses for discriminatory action against the group least able to defend themselves, the wage and salary earners. The claim that overseas exchange difficulties were due to the fall in wool prices was contradicted by every reputable economist, said Mr Skinner. The Government had to admit that this was only the final event in a chain of circumstances which spread over a considerable number of years.

Wage-rate and earnings statistics showed that

minimum wage rates had steadily fallen behind the advance of living costs and productivity. “They show, too, that ruling rates of wages coupled with overtime and bonus payments have done no more than keep up with rising productivity and compensate for growing inflation.

“Earnings in the form of salaries and wages have not reached the heights achieved by incomes from exports, from locally-sold manufacturers or from trading in imports. Support Schemes “There are various support schemes for our primary producers and we do not deny the need to keep them in operation, but we do not think that they should be the only ones sustained in this way. The wage and salary earners are equally necessary to this country and equally deserving of an assurance that reasonable living standards can be maintained,” he said. The present export incentives were given to the owners of the means of export production and the incentives were now extended to farmers even when their produce was sold at a loss, as in the case of butter and wool. Yet workers engaged in the production, processing and handling of these commodities did not get the same consideration. Checks, Balances

“Their wages are regarded solely as costs to be held down as far as possible. If incentives to produce are to be effective, they should apply to all those who work in the industry concerned,” said Mr Skinner. The trade unions’ offer to the Government was that they would accept wage restraint in the national interest if this was equitable and just when compared with the restraints and sacrifices demanded of others.

No direct oyer-all restraint had been applied and the Government appeared to be satisfied to rely on the eventual long-term effects which it anticipated from its economic policies. “It is leaving the economy to run itself, without direct intervention, In the belief that the various checks and balances which normally operate will produce the desired stability and balance,” said Mr Skinner.

One of the normal processes was the court’s review and the adjustment of wages by general order. “This is a recognised method which can maintain a balance in the economy by

providing equitable standards for wage and salary earners.

“The Government desires normal processes to continue and has provided funds for some sections of the farming industries to this end. It has not Intervened directly in matters of wage fixation, as it could by regulation or statute, and the Prime Minister has said that there is no intention to alter the law to prevent the wage and salary earners putting their case to the court,” said Mr Skinner.

The employment situation and previous general orders emphasised the need for careful consideration by the court and for "compensation to maintain reasonable and comparable living standards for wage and salary earners.” “In making general orders in the more recent past the court has invariably referred to the employment situation and to ruling rates of wages which were current.

Export Income “The orders have, in the accompanying memoranda, spoken of the undesirable economic effects that could follow if a substantial increase in wage rates were ordered and should there be at the same time a serious downturn in export income,” he said. Latterly, the court commented in regard to general orders that workers on minimum wage rates had been entitled to some compensation because of the rising cost of living and an increase in productivity. This had been qualified by the statement that any increase should be held to a minimum because the increase could be expected to affect ruling rates where, it was said, parity had to be maintained with the increases in the cost of living and in productivity. In the orders made up to 1964 it appeared that minimum rates were increased in order to compensate for higher living costs and the increase in productivity was considered to have been accounted for in the higher level of ruling rates. This appeared to be reversed in the 1966 general order, in which increases in retail prices were linked with increases in award rates of wages, and the wage increase appeared to relate mainly to increased productivity. Court Cautious

The court had consistently acted cautiously. The grounds for this were that it should not precipitate economic difficulties which could follow if a general wage increase of generous proportions should be followed by a slump in export income, because any increase granted on the basis of past increase in productivity would need to be paid .from the proceeds of future productivity.

Since the court covered these contingencies when making previous general orders, it must follow that the court was still in a position, because of its previous caution, to order a general wage increase which would raise the minimum wage rates to a level which would be just and equitable in the light of incomes and living standards of others in the community, taking into account the support schemes and the production incentives which were being .financed with public money.

The application is based not on a claim that prosperity should be equally shared by ' all sections, but on the pre- , sent situation—when we believe that all sections of the community should contribute proportionately to the effort of recovery. In good times, the wage and salary earners have lagged behind in the sharing of national prosperity. Now, in a time of economic stringency, no other section of the community is volunteering to make any contribution which it can avoid making, and all other sections seem unanimous in a desire to climb to prosperity on the backs of others, the wageearners principally. Better Times “We are not asking, as well we might in these circumstances, that the court should ignore or heavily discount economic conditions, as they were discounted in better times,” said Mr Skinner. “We are not putting before the court a statement of prosperity and high incomes of others in the community, with a request that it should be shared more fairly. “This time we have been driven to the court to ask that the burden of the heavily deflationary measures of 1967 should not have a disproportionate effect on wage and salary earners, of whom an increasing number are unemployed and many others are suffering reductions in earnings and wage rates.” Mr Skinner termed the court’s last increase of 2j per cent, effective from December, 1966, a “minimum order” designed to avoid any undesirable inflationary effects which it might have on the general economy.

“The court was successful in avoiding any suggestion qf a wage spiral, but price increases and inflation carried on just the same.” Price Index The union’s submissions contained a table recording the movement of the consumer price index since June, 1966, and showed an increase of 79 points, which, said Mr Skinner, represented an increase of 7.7 per cent in the cost of living.

A major part of this increase occurred as a result of the rise in prices of essential foodstuffs, as a result of removal of consumer subsidies. “This action by the Government increased retail prices of a wide range of commodities,” Mr Skinner said.

He said the Government had used the reduction in wool prices as a pretext to abolish food subsidies and raised the cost of the most essential item purchased by every household. The F.0.L., backed by an opinion expressed by a former Prime Minister, Sir Sidney Holland, believed that the removal of subsidies should be accompanied by an adjustment of wage rates to retain wage values.

Mr Skinner said while it was true that the slump in wool prices had seriously affected total export receipts, income from other exports had risen.

The farming community generally would benefit from devaluation. Manufacturers would enjoy even greater benefits. The commercial and business community could cover itself against higher costs by handing increases on to consumers. Consumers were largely wage and salary earners. Overseas Assets He said the outstanding feature of the balance-of-payments situation had been the woolgrowers’ refusal to sell their wool at the prices offered.

By refusing to sell wool at current prices, the woolgrowers deprived the country of large sums in overseas assets and put a great deal of credit into circulation in New Zealand.

But the biggest problem had not been in export receipts but in the growth of “invisibles.”

After paying for imported goods there were balances left, but these were able to pay only a fraction of the unfavourable balance of invisibles and the deficit of the three years from this cause was $270,200,000 in 1965, $268,400,000 in 1966 and $305,000,000 last year. “If wage rates had kept up with price rises and productivity they would have risen by 29.8 per cent in the last five years. “They actually rose by, 18.2 per cent as far as minimum rates are concerned, and by 28.1 per cent in the case of average earnings of wage and salary earnings." Cost Of Living To a growing number of wage and salary earners out of work the level of wage rates was an academic matter but the cost of living was not, he said. The case before the court hinged on two matters—the cost of living and the relationship between incomes of the various sections of the community. The cost of living also had to be considered in the context of relative hardship and sacrifice, because increases were so fundamental—starting with bread and butter —that they affected, every household.

“We do not consider that the impact of this sacrifice is represented equally in the community, Mr Skinner said. Mr Skinner called the Government Statistician, Mr J. V. T. Baker, to the stand to verify the accuracy of figures used in the unions’ submissions.

The hearing was adjourned on the request of the Employers’ Federation advocate (Mr P. J. Luxford) and will continue tomorrow morning.