Unions and employers sum up wage case

Press, 28 April 1981, Page 3

Unions and employers sum up wage case

PA Wellington Unions and employers remained at loggerheads yesterday in the Arbitration court on the possible effects of a Federation of Labour application for an 11 per cent general wage and salary increase.

The unions argued that such an increase would be “beneficial” and would help employment; the employers argued that it would boost costs and inflation. After final submissions, the court reserved its decision.

The F.O.L. and the Combined State Unions told the court that the increase would help employment and industrial harmony, and stimulate internal demand for a 3.7 per cent increase in consumer prices. "This movement is manageable and should be regarded as a small price to pay for the beneficial effects,” said the State Unions’ Secretary. Mr B. Tucker. The Employers’ Federation and the deputy Treasury secretary, Mr J. McKenzie, representing the Minister of Finance (Mr Muldoon), suggested, however, that the Consumers Price Index would jump 8.3 per cent, and add to unemployment, inflation. and balance of payment problems. The federation's executive director, Mr J. W. Rowe, said any wage order would add to the 18.5 per cent increase in

weekly wage rates since June, 1980.

“An 11 per cent order on top of that would total 31.5 per cent — a fraction greater than the 31 per cent wages explosion in 1970 that triggered the imposition of wage stabilisation in 1971,” Mr Rowe said.

Mr McKenzie said if producers, wholesalers, and retailers moved to maintain percentage margins, plus indirect taxes, subsides and the exchange rate were adjusted ”83 per cent of any wage increase that is not matched by an underlying growth in real incomes will simply dissipate in higher prices to the benefit of none.” “There is no case that a redistribution of income is necessary to protect the. position of wage and salary earners. Since 1978 their share of the cake has been maintained and arguably has grown slightly more than the cake has grown,” he said. He concluded by quoting earlier evidence presented by the Reserve Banks’s governor, Mr R. W. R. White:

• "The country is now moving into a period in which we hope to see renewed prosperity and growth based on expanded export activity and investment. Any substantial wage increase would detract from recovery.” Mr Tucker noted that evidence for effects of'the cost-of-living adjustment on ..the balance > of 'payments was

vague, but emphasised, with the federation, that: “The evidence is quite clear that a failure to make any adjustment to pay rates cannot be seen as being a suitable vehicle for achieving stability in the balance of payments.” He criticised the lack of evidence from Mr White to link higher wages with higher unemployment and said labour costs were falling in proportion to total production costs — about 33 per cent, adding weight to his predicted 3.7 per cent flowon price's effect. He also criticised what he called the “tissue-thin” theories advanced by Mr McKenzie against “the acid test of what has happened to the economy in the last six months.”

Recent award negotiations worth about 13.7 per cent were contrasted with the drop in annual inflation rates, stabilising unemploy-, ment, and the marginal improvement in overseas funds.

“If the economy can accommodate a 13.7 per cent wage round without there being a dramatic increase in instability, then why should an 11 per cent increase suddenly trigger effects which have not been engendered on other occasions?” Mr Tucker said.

The court, headed by Chief Judge J. P. R. Horn, with Messrs P. Oldham and D. Jacobs, reserved its decision.