UNIVERSITY RESEARCH Study Of Wages And Prices In N.Z.

Press, Volume CX, Issue 32394, 5 September 1970, Page 7

UNIVERSITY RESEARCH Study Of Wages And Prices In N.Z.

(Contributed by the Information Office, University of Canterbury) New Zealanders are about three times better off than they were at the turn of the century, according to Mr W. Rosenberg, a reader in the economics department of the University of Canterbury, in a study of wages and prices this century.

Completed before the current round of wage increases, the survey shows that up to this year wage rates in New Zealand had fallen behind those of countries which once had lower rates than New Zealand.

Mr Rosenberg concludes that the New Zealand arbitration system is the cause of this relative decline and suggests that the present system of industrial relations—Arbitration Court and industrial bargaining—should be formally recognised by legislation. Mr Rosenberg found that during this century prices have risen by 550 per cent and the average weekly award wage by 750 per cent, from $4.70 in 1902 to $35.25 last year (male adults). Because of reductions in working hours during this period the purchasing power of the hourly award rate rose faster and on the basis of 1901 —lOO it stood at 157 last year. There had been no change since 1954. If other earnings aboveaward rates and bonus and overtime payments were taken into account there had been an increase of 250 per cent in the purchasing power of 1901 earnings, Mr Rosenberg says. And if improved conditions, such as holidays and the faster rate of juvenile and female wage increases were also taken into account, the average earnings of New Zealand wage and salary earners would probably buy today three times as much as they did in 1901.

Overseas Comparisons

In 1919 wages for unskilled workers in New Zealand were higher than in the United States though the wages of skilled Americans were higher. Since then the average

American wage level had risen to 2.7 times that of New Zealand in money terms. Australian wages were lower than in New Zealand in 1945, but had risen much higher by last year. The relation between Australian male wages and combined New Zealand male and female wages expressed in purchasing power in 1949-50 was 100: 81. Last year it was 100:66. Similarly British wages, which were once well below those of New Zealand, were now almost equal. Mr Rosenberg believes compulsory arbitration is the cause of this relative slide. Compulsory arbitration, he says, must be based on the principle of fair relativity, by which a rise in one trade must quickly find its way throughout the whole wage structure. As a result the Arbitration Court tried to avoid change. Cost-of-living adjustments for all awards simultaneously were the only way of maintaining the principle of fair relativity on which compulsory arbitration had to be based, while at the same time taking account of rising consumer prices. Cost Of Strikes “The fact that the Court is constitutionally incapable of raising real wages leads to the development of ‘aboveaward’ levels won outside the Court,” Mr Rosenberg says. When there was unemployment most wages were at, or very close to, award wages. With full employment there was a constant movement away from the real wage stability principle of the Court “When the Court no longer fixes real wages there is no more reason for the strike clauses of the Industrial Conciliation and Arbitration Act to be either obeyed or enforced,” he says. “We now have a dual system partly based on the Court and partly on Industrial bargaining. This dual position

should be acknowledged legislatively.” Mr Rosenberg says an analysis of strikes indicates their relative unimportance. In the seven years 1960 to 1966, $45 million was lost because of industrial accidents and $3.4 million lost in wages because of strikes. In the same period 21.2 million days were lost because of industrial accidents and 409,000 days because of strikes. In perusing material for this project, Mr Rosenberg also discovered: — The average award rate for women is now 70 per cent of that for men compared with 58 per cent in 1930. Youths do earn more. Adult male money wages rose to 3.64 times the 1930 level in 1967. but juvenile male rates rose 5.28 times and juvenile female rates 5.84 times in the same period, Between 1900 and 1935 there were 12 years of falling prices and 23 years of rising prices. In. 1906 prices rose 6 per cent and between 1911 and 1914 they rose by 10 « per cent. So much, com- > ments Mr Rosenberg, for the illusion of price stability before 1914. Since 1935 there has not been one year of falling prices. The absence of margins for skill was deplored as long ago as 1919. In that year a railway enginedriver, the highest-paid skilled worker, earned twice as much as a ploughman, the lowestpaid unskilled worker. It was the same in 1967. Whether there were margins for skill seemed to depend on the militancy of tradesmen's unions, and not on specific considerations of * the degree of skill required for a trade.