‘Effect of wage order manageable’

Press, 27 March 1981, Page 4

‘Effect of wage order manageable’

PA Wellington Prices .would rise by just over 4 per cent if a General Wage Order of 11 per cent was granted, the Combined State Unions told the Arbitration Court yesterday. -The C.S.U. presented submissions in support of the Federation of Labour’s application for an 11 per cent general cost of living order.

Its secretary, Mr Barry Tucker, said an 11 per cent wage adjustment, if passed on in lull in increased consumer prices, would cause a 4.14 per cent increase in the consumer price index. “This is significant, but it is manageable within the framework of the inflation of the last seven years. “The inflation ‘cost’ of the wage order, has moreover, to be compared with the costs of falling living standards, declining morale, frustration, falling retail sales, stagnation, and rising unemployment that would be borne if the order is not made.” Mr Tucker said it was impossible to blame wage increases for all of the inflation in recent years;

It was incorrect to suggest

that any general increase in wages would cause prices to rise by the same amount so the wage rise would be eaten away by rising prices, he said.

“It is also clear that if wages do not rise when the other components in the price structure —profits, interest rates, taxes, imports, etc. — do. workers will be swamped by the price rises. I “While it is impossible to Ibe specific about what role | wage adjustment has had in generating inflation, the general point that there are strong non-wage inflationary forces at work in the economy can be established beyond any doubt. “The consequence of this is that wage adjustments to compensate for rising costs of living are imperative, because any wage “pause” will not be rewarded by a compensating fall in the inflation rate in the next time period.” Policies to control inflation needed to be cast more widely than a simple control on money wage rates if they were to be effective.

They would have to be comprehensive and employ a wide range of weapons.

“It is futile to pick on any one cause and hope for success.

“More specifically, wage control is no answer to the problem of the rising cost of living.” Mr Tucker said there could be little doubt the economy did have the resources available to produce extra outlets required to satisfy any increased consumer spending that may flow from a general increase in wage rates. The executive director of the Employers’ Federation, Mr J. H. Rowe, yesterday apologised to the Arbitration Court if it considered he was guilty of - any impropriety.

Mr Rowe's comment followed a complaint to Chief Judge J. R. P. Horn from Mr Tucker. Mr Tucker said the C.S.U. executive had met yesterday morning to discuss a Radio New Zealand interview with Mr Rowe, made on Wednesday on the effects on the economy of the Federation of Labour application for an 11 per cent cost of living adjustment.