Controls distorting wage system — Mr Skinner

Press, Volume CXIV, Issue 33527, 7 May 1974, Page 2

Controls distorting wage system — Mr Skinner

(New Zealand Press Association)

WELLINGTON, May 6.

Replacement of the system of wage negotiation by rigid controls had the effect of distorting the wages pattern, the president of the Federation of Labour (Mr T. E. Skinner) said today.

The distortion occurred both from the point of view of the over-all level of wages and also in relativities between different types of workers, he said in his address to the annual conference of the ! federation in Wellington.

“The consequence of this distortion is unrest and a deterioration of industrial relations, because employers and workers are no longer permitted to come to understanding between themselves on the wages and conditions which are proper in particular circumstances," he said. “Unfortunately, there is a school of thought in influential circles which believes that some form of control must be maintained permanently by the Government, although it has been proved in the past a number of times that controls do a great deal of economic damage, no matter how good are the intentions of those who impose them.

“We believe that controls are dangerous if they are too restrictive,” Mr Skinner said. “We have good reason for believing this, from the evidence of events in the past, particularly in the recent past.

"Controls were necessary in war-time, and they were very strict and were applied in considerable detail. This was something that had to be done in a state of national emergency such as the one that existed.

“In the last year or two we have had a return of the same type of detailed controls, imposed as a result of what was regarded as an internal national emergency, which has done little more than distort the economy and make life more difficult for most people in it.”

Mr Skinner said that not very long ago the average number of industrial stoppages in New Zealand had been among the lowest in the world, but this was no longer the case.

“A return to a system of negotiation, and of conciliation and arbitration, seems to be the logical answer to our problems,” he said.

I By intervention, starting several years ago, the Government had destroyed the fabric of the system of negotiation, and had failed to replace it with something better.

“This is not a criticism, particularly of the present Government,” Mr Skinner said. “It is a statement of what has happened over a number of years past.”

At present wage and salary earners had been required to refrain from negotiating wage increases with their employers. This meant that wage and salary earners were forgoing an increase in income, and would never recover it. No system was perfect, but this one was “obviously unbalanced.” "The system of industrial

conciliation and arbitration, with all its faults, did manage to preserve some kind of balance in incomes in the community,” Mr Skinner said. “There is no substitute for free negotiation in the industrial world.”

The present problem was the result of prosperity rather than of economic depression. “The fact is that the problem has not been identified. We have tried to remedy the symptoms, not the cause,” Mr Skinner said. It was impossible for New Zealand to insulate itself from the economic changes which were taking place overseas, and while it was proper and desirable that internal inflation should be restrained as much as possible, New Zealand must be influenced by overseas events. The best policy was to adapt to what was happening overseas.