THE PRESS WEDNESDAY, MAY 27, 1981. Wages: wait for the Budget

Press, 27 May 1981, Page 22

THE PRESS WEDNESDAY, MAY 27, 1981. Wages: wait for the Budget

The Arbitration Court remarked in its judgment on the application for a general increase in wages that it was for individual trade unions to decide whether the 5 per cent increase awarded by the Court should be taken into account in this year’s round of award negotiations. The judgment added: “We express the view with some confidence that the increase by virtue of this decision should have very considerable bearing on any 1981 wage round from the operative date of the increase resulting from this decision. It would be quite unfair for any group to seek to acquire its cake both ways.’’

The Federation of Labour, in its submissions to the Court, sought an increase of 11 per cent. The president of the F.0.L., Mr J. W. Knox, said that such an increase was necessary to restore living standards in .June this year to those of September. 1974. Mr Knox has expressed satisfaction with the Court’s decision. In other words, once the 5 per cent is added to wages and salaries from June 11. incomes may be assumed to be providing a reasonable standard of living. Not all wage earners would agree, any more than many employers would accept that a 5 per cent wage increase is a justified "catch-up." Still, a starting point has to be found for further negotiations on the vexed questions of wages, taxes and inflation. If wage levels after next month’s increase are accepted as generally fair, what remains to be negotiated in award talks are improved conditions of employment, adjustments in relativities and, perhaps, any further wage increase made in anticipation of increases in the cost of living in the next 12 months. Some unions might well want to begin their award talks by attempting to recover the further 6 per cent originally sought by the F.O.L.' from the Court. Unions are likely to argue that, on the latest figures, the rate of inflation in New Zealand is still at least 14 per cent a year and that some increase in the cost of living at about that rate has to be expected in the next 12 months. Unions will argue that wage increases should be at an appropriate rate; to which employers might well reply that if the unions seek further wage increases at such a level, prices will almost certainly rise by a proportionate amount. The prospect of a healthy reduction in rates of personal income tax in the Budget is being offered by the Government in an attempt to restrain wage demands. The Budget is still at least six weeks away. If

Budget secrecy is. to be preserved, the extent of any' tax cut cannot be made known. In the absence of an agreement with the unions a tax cut cannot even be determined.

This need not preclude further discussions between the Government and the F.O.L. on the application of the principle of tax reductions in exchange for restraint in wage demands. It would be foolish, however, for the Government to curtail award negotiations in the next few weeks. Equally, it would be unfair to have settlements of some awards before the extent of tax concessions are known. Such settlements would set precedents; if substantial increases were agreed, the tax cuts might have to be much smaller than is desirable for the well-being of the economy.

A compromise is needed until after the Budget. Settlements of the awards coming up first for negotiation need to be deferred, with appropriate provision for back-dating of increases until the contents of .the Budget are known. In the meantime the Minister of Finance. Mr Muldoon, is not improving the mood of the trade union movement by suggestions of what wage increases this year should be. To mention figures is to invite uninformed speculation about the extent of changes in taxation. Any figure likely to appeal to . the, Government is going to sound too low to trade unionists.

The extent of any increases in incomes must, finally, be adjusted to the country’s ability to pay. All sensible sections of the trade union movement know this. Trade unionists also know that while the Government’s reputation in economic management does not stand high among them, public feeling against irresponsible attitudes from trade unions is running high. Unrealistic wage demands, backed up by industrial action, can only help the Government as the General Election gets closer.

A voluntary pause in the settlement of awards between June 11 and the Budget would help to promote fair and reasonable settlements later in the year. In the meantime, attempts to dictate the level of incomes will not be helpful, whatever the source of the dictation. Free bargaining should be preserved if at all possible; and the freedom entails responsible bargaining, not just the largest possible extraction of wages for which the wage-earners, in turn, have to pay through prices.