F.O.L. asks for $147 base wage

Press, 10 July 1979, Page 1

F.O.L. asks for $147 base wage

PA Wellington The Federation of i.abour yesterday applied to the Court of Arbitration for a minimum living wage under the General Wage Orders Act.

The federation’s president (Mr W. J. Knox) said yesterday that duplication was made to the Court under the General Wage Orders Act, 1977, to have the lowest rates in all awards and agreements lifter* to a gross figure of $147 per week. This figure will mean a net take-home pay for s i n g 1 e-income families after tax of $123, and for a single nerson. $lll. “It is based on the very bare necessitie* of life,” said Mr Knox. The F.O.L. hopes that the application will be heard later this month or early in August, before the September round of award talks begin. The concept of the minimum living wage was placed before delegates at the annual conference of the F.O.L. in Wellington in Mav and was supported overwhelmingly. The m’. imum wage was based on the belief that the economic crisis in New Zealand was hitting hardest those groups with the least bargaining power, particularly the lower-paid family, said Mr Knox. Workers earning more than the $147 a week gross will not benefit from the claim, which is permissible under the act. The federation expects skilled workers to negotiate their extra pay within individual awards in the same way as they do a* nresent. The minimum living wage was calculated on

Aprii figures and the f.gure would need to be amended to take into account the expected high consumer price index figures for the June quarter, Mr Knox said Ir a newsletter released with the wage application, R Knox said that recent price increases had hit basic living essentials, such as milk, butter, bread, electricity and public transport. Food prices had risen 18 per cot in the last year, and this had hurt low-in-come groups most. Attempts by the Government to reduce the deficit had often meant reductions in services which were particularly important tc low-income groups, such as public transport and public hospital services. The news release also said that to keep up with increasing prices, the F.O.L. would go back to the Arbitration Court every six months to make sure that wages kept pace. The proposal met immediate reaction from the Acting Prime Minister (Mr Taiboys), who said that a minimum living wage of $147 before tax could only result in higher unemployment and a bigger inflation rate. Mr Taiboys said the figure fell just short of the average weekly wage of $153.45, as revealed in the Labour Department’s half-yearly survey to April. It had been estimated that 68 per cent of New Zealand’s work-force were paid rates below the national average.

Mr Taiboys said that the F.O.L. had discussed the proposal with the Prime Minister (Mr Muldoon), who had expressed interest in the idea but it had been thought at the time that the minimum living wage the F.O.L. was proposing was an aftertax concept. Mr Taiboys said an order which increased the minimum private sector rates to anything like $147 a week would impose some ‘‘very real rigidities” on the labour market.

‘‘lt could only result in higher unemployment, particularly in labour-intensive industries,” Said Mr Taiboys. He estimated the greatest impact would be felt by women and younger workers, mdt of whom would

now earn less than $147 a week. The proposal, if implemented, would also have a severe effect, on margins for skill. Any compression of these margins would have serious consequences for recruitment and retention of skilled labour said Mr Talboys. If the increase in the lower wage rates flowed on to the rest of the workforce, thus avoiding relativity distortions, the flow-on would defeat the F.O.L. argument about social objectives.

“I do not think there is any question that it would lead to an inflationary push that would be damaging to the economy as a whole,” said Mr Taiboys. “The centra! question that is raised by the proposals is whether the minimum living wage for families with one is a legitimate basis

for wage rates, or whether this would result in an intolerable burden on the labour market.”

Mr Taiboys said the F.O.L. proposal did not take into account the effect on juveniles or the public sector. Nor had the F.O.L. apparently made any allowance for the single-income tax rebate, or the family benefit. He said he expected the normal procedure for general wage order hearings, in which the Government is represented at the Arbitration Court, to be followed. But he did not explain what the Government’s position would be.

An average New Zealand worker earned $153.45 in an ordinary week in April, 1979, a 9.1 per cent increase in six months and a 16.1 per cent increase over the April year. The figures from'

the Labour Department's 1979 half-yearly employment information survey released yesterday by the Minister of Labour (Mr Bolger). The average weekly earnings of a male increased 9.3 per cent from October to April, reaching 5169.59, while the 9 per cent increase for females raised their average weekly earnings to $127.68. The 16.1 per cent increase for all surveyed workers over the 12 months to April, 1979, compares with 11.9 per cent for the year to April, 1978. For males, the increase was 16.3 per cent, compared with 11.9 per cent for the previous year. For females, the corresponding increases were 16.7 per cent and 11.8 per cent. All figures include the! July, 1978, general wage: order of 7 per cent up to a maximum of $7 a week.