Effect of wage drift

Press, Volume CXII, Issue 32902, 28 April 1972, Page 2

Effect of wage drift

(N-Z. Press Association) WELLINGTON, April 27. The prevalence of national award regulations and acute shortages of labour had contributed to the emergence of wage drift, said the Secretary of Labour (Mr E. G. Davey) today.

Mr Davey was making submissions to the Royal Commission on Salary and Wagefixing Procedures in the State Services.

“By wage drift is meant the extent to which actual rates of pay exceed those collectively negotiated," he said in submissions on changes in the wage-fixing procedures in the private sector over the- last three years.

LEVEL VITAL The extent to which negotiated rates of pay were the rates paid in practice depended on the level at

which negotiations took place and on the method of payment, he said. Where basic negotiations took place primarily at plant level there was little likelihood of wage drift. However, where negotiations were primarily at industry on national level, it was likely that a considerable number of workers would be paid more than the minimum laid down in the collective agreement, said Mr Davey. OVERTIME OFFERS

Employers faced with the necessity of attracting and retaining labour had been forced to provide additional Incentives to those negotiated by the union. This was seen in the provision of systematic overtime and other fringe benefits.

Wage drift would comprise number of components which broadly reflected-labour market forces—a locality differential, a differential for skill, sex, productivity and so on. In New Zealand the necessary data were not available

to measure accurately the extent of wage drift. Wage drift was not in itself necessarily evidence of a breakdown in the formal wage-fixing machinery. Where national negotiations took place, wage drift performed a useful function in channelling labour into the expanding areas and sectors. FAULTS SEEN “It has, however, reached undue proportions and it suggests that deficiencies exist in the formal system of wage determination," said Mr Davey. If the wage drift element was becoming an important component of the total pay packet, then it was particularly relevant when comparing State and private sector rates of pay.

For this reason, and if the criterion of fair comparability was to be maintained in the determination of State rates, it was important that more research be done to determine its significance in the private sector.