The Press WEDNESDAY, JULY 10, 1968. Wage-Fixing

Press, Volume CVIII, Issue 31727, 10 July 1968, Page 12

The Press WEDNESDAY, JULY 10, 1968. Wage-Fixing

The proposed amendment to the Economic Stabilisation Regulations should be rejected by the Government The amendment would require the Court of Arbitration, when making a general wage order, to give “ primary consideration ” to any rise or fall in retail prices as reflected in the consumers price index. As the regulations now stand this is only one —though the first—of five considerations which the Court is directed to take into account In its decision last month the Court indicated that it had indeed taken this consideration into account, but on this occasion felt that the second consideration—“ the “ economic conditions affecting finance, trade and “ industry in New Zealand ” —was of more Importance. The disappointment of many wage-earners with the Court’s decision has already caused stop-work meetings, demonstrations, and strikes by several unions. Threats of further industrial unrest have been made by militant trade union officials. Employers and moderate elements in the trade union movement have a common interest in preventing serious industrial unrest: but the agreement between the Federation of Labour and the Employers’ Federation to seek an amendment in the Court’s criteria is ill-considered. Appeasement never satisfies for long the industrial militant Just how the Court would interpret a direction to give the cost of living “ primary consideration ” is open to doubt: it might consider that, as the regulations stand, it already gives this criterion primary consideration. Clearly, however, both the president of the Federation of Labour (Mr T. E. Skinner) and the director of the Employers’ Federation (Mr P. J. Luxford) expect the Court, if their proposed amendment is accepted by the Government, to make a general order increasing wages; the Federation of Labour would doubtless renew its claim for an increase of 7.6 per cent The immediate effects of such an inflationary increase in spending power would be serious enough —sufficient probably, to turn the recent surplus in overseas exchange transactions into a deficit—but the long-term effects might be even more damaging. Export industries would become less competitive in overseas markets, investment and production would increasingly be diverted into supplying a voracious local market overseas reserves would be further drained, and a return to the recurring balance-of-payments crises of the last 10 years could hardly be avoided.

The increased emphasis on general wage orders would be especially detrimental to skilled workers and others with better-than-average claims for increases in their particular awards. In the last 10 years award wages have risen 37 per cent but only 17 per cent of this increase resulted from general wage orders. The remaining 20 per cent represents gains made in individual award rates negotiated in conciliation or awarded by the Court If the Court is required in future to place much more emphasis on the cost of living when considering a claim for a general wage order neither the employers nor the Court could afford to be so generous to individual unions as in the past.

The “ structural changes ” in the economy prescribed by the World Bank mission, the Monetary and Economic Council, the New Zealand Institute of Economic Research, and other independent authorities require more differentiation, not less, in wage rates. Since devaluation there have been signs that labour has been moving from static to expanding industries. The proposed amendment to the Court’s criteria, if it has the effect intended, would check that movement and restrict the country’s economic growth.