COMMENT FROM THE CAPITAL DISCUSSIONS SOON ON NEW WAGE-FIXING PROCEDURES

Press, Volume CVIII, Issue 31773, 2 September 1968, Page 12

COMMENT FROM THE CAPITAL DISCUSSIONS SOON ON NEW WAGE-FIXING PROCEDURES

(By Our Parliamentary Reporter)

WELLINGTON, September I.—No time will be lost in initiating discussions on the review of wage-fixing procedures promised by the Prime Minister (Mr Holyoake). Representatives of the Government, employers and labour believe, however, that the road to a completely acceptable new system will be a long and hard one.

Among the first steps along that road have been the receipt of the report of the Royal Commission of Inquiry into salary and wage-fixing procedures in the State Services, and the prior invitation by the Minister of Labour (Mr Shand) to worker and employer representatives to meet him to discuss the best course to follow. It is apparent that the meeting cannot take place before late in September. The Asian Regional Conference of the International Labour Organisation opens this week in Tokyo. The Secretary of Labour (Mr N. S. Woods) has already left to take part in preliminary discussions, and Mr Shand is expected to leave Wellington on Tuesday to attend the Ministers’ meeting, scheduled for September 9. The 227-page report of the Royal Commission is merely one of the documents which must be absorbed by those engaged in any replanning of wage-fixing procedures. There are 62 recommendations, many of which apply to gen- ' eral wage-fixing as well as to the special conditions of the State Services. | System “Too Slow” The first of these is based on the premise that the present system of ruling rates surveys is too slow and cumbersome, and that wages should be related even more closely to the cost of living. It is felt that most of the discontent felt today by wageearners could be alleviated if an automatic system of wagecost adjustment were found. It has been suggested that, although the ruling rates survey accomplishes its purpose, it does so usually with retrospective pay adjustments and other devices which do not help the wage-earner to plan his expenditure economically. The president of the Federation of Labour (Mr T. E. Skinner) has said publicly that he does not feel there has been any delay in getting the parties together. Mr Holyoake’s original promise was made before the Arbitration Court had reconsidered the second application made after the federation's original application for a general wage order had been declined.

Now that a new order has been made, the Royal Commission’s report on State Services pay procedures has been tabled, and the industrial air has cleared again, some concrete proposals are already available for discussion. Biannual Survey One solution is expressed in a recommendation of the Royal Commission’s report; it suggests that the ruling rates

survey should be replaced by the Labour Department’s halfyearly survey of wages. The recommendation is related to State Services pay only, of course; but there seems little doubt that it could be applied equally well to all wages systems. It covers the same ground as the ruling rates survey, and uses the same figures—but it does so every six months.

The Labour Department survey is carried out in the middle of April and October each year. The data are collected in broad industrial groups: so the private sector can be separated from State Services. The information used in the Labour Department survey is supplied by employers in answer to a list of specific questions. These answers arc checked over by the department, and may be referred back to an employer. From this information the department calculates the average weekly and hourly earnings of employees, bonuses and special payments, and overtime payments. The most important figure obtained, however, is the average weekly earning in ordinary pay. This is not affected by a rise in the number of hours worked. Pros And Cons The half-yearly system has been criticised because it is based on earnings rather than rates of pay, and because, at present, it does not distinguish between male and female rates of pay. Its advantages over the ruling rates survey include its frequency, its universality, and its application for one purpose only. Difficulties in the adoption of the half-yearly system as a measure of wage-movements arise mainly because of the changes in the labour force

itself during a year. Seasonal workers are more numerous in April than in October; school-leavers, starting work in December and January, depress the April average; the inclusion of women and parttime employees affects the figures. Although none of these problems seem insuperable the principal reaction against this idea would probably come from employers. Formula Sought A new formula by which tn consider general wage rates is being sought. The following principles are favoured by economists and by Government authorities:

(1) The first task in any move to adjust wages in relation to cost-of-living fluctuations is to determine the purchasing power of the average wage at the time.

(2) Having established this, the Court should consider whether any other reason exists, such as changes in the terms of trade or variations in productivity, which would justify further adjustment.

This kind of formula would allow anyone to understand the system. Its disadvantage might be that award rates remained stable and ruling rates continued to rise above award rates.

The most important factor is the computation of the “effective wage rate," which, simply expressed, is the wage that will purchase essential goods and services at any one time.

Choosing a formula acceptable to all parties will undoubtedly be difficult and time-consuming, but there are indications that the climate of discussion is more favourable than at any time in the last few years.