F.O.L. policy on wages

Press, 12 May 1981, Page 16

F.O.L. policy on wages

By

BRIAR WHITEHEAD

> in Wellington

The rejection by the Federation of Labour of tax cuts to replace wage increases appears to be provisional only. Although the federation’s conference in Wellington last week opposed using tax to offset wage demands, it did so because of inherent inequities in the tax collection system, namely the burden of tax upon workers compared to companies. This suggests that any reform of the system might oe met by F.OL. willingness to reconsider tax cuts as a method of wage fixing. Until then, and given that a tax offset might be only one factor in wage-setting anyway, tne F.O.L. is working hard on a wage-fixing policy it can call its own. A discussion paper to form the basis of formation of such a policy by unions was given to 380 delegates at the conference, ft was described as a paper giving “necessary background” to an alternative economic policy proposal to be put to the conference by the federation’s national executive. The paper contained a warning that anv dramatic change in the wage-fixing system would lead to “a great deal of strain in union organisation.” However, this should be seen less as a major obstacle than a short-term cost for long-term

benefits. The strain referred to would be caused by the need for unions to amalgamate in an industry-based rather than a craft-based approach to wage negotiating. This means that all unions within a given industry would unite in talks with employers at local or national levels (this aspect is not yet firm) to work out rates of each craft to the other within that industry. This raised some fears at conference that smaller unions would be over-ridden, or absorbed, and officials made redundant. Assurances were given that this need not be so, but unions are wary. The paper conceded the need for margins for skill, and higheir wages in some sectors than in others. Higher wages drew employment to sectors where growth was most promising. It also raised the ceiling of over-all wage rates through the trend-setting process. It plainly stated the need to get away from the “benchmark” framework. This meant the level of increase of wages in each round was set by two or tnree Key awards. Unions should decide whether they wanted a wide spread of wage rates, or a cluster round the mean. If the former, then wage increases of equal cash amounts were best;

if the latter, then a percentage increase. The discussion paper laid out the options to workers: a relativity system based on tripartite discussions, applications to the Arbitration Court, and a “social contract, indexation of wages to the cost of living either by a General Wage Order or automatic adjustment, also to have a relativity base; wage-fixing on industry lines, nationally negotiated but with adjustments at the local level to reflect productivity, and ability to pay; industry bargaining at local levels only, by a composite union group; and a nationally negotiated minimum wage or cost of. living adjustment formula, on which industries at the local level could set margins. The choice of the federation is the last one. It wants a minimum wage calculated for a single worker or, where tax rebates for families are inadequate, for a worker supporting a family, and rights to take to the Arbitration Court a case for six monthly adjustments to that wage, with effects to all workers. Industries able to establish other “mutually acceptable procedures” could opt out of this. But the minimum living wage would still have to be the base rate.