‘Battle lines’ after employers assess increase

Press, 19 August 1981, Page 6

‘Battle lines’ after employers assess increase

From

PHILIP WORTHINGTON,

in Wellington

“Battle lines’.' have been drawn for what threatens to be a bitter round of wage negotiations this season. The Federation of Labour has already declared its belief . that a mimimum increase'in’wages of 14 per cent would be necessary to maintain real incomes.

In a historic "first,” the Employers’ Federation ■ yesterday made public its assessment of a “justifiable” increase — and pegged it to 5 to 7 per cent, less than half of the level indicated by the F.O.L.

Until yesterday, never had the Employers’ Federation prepared such an assessment and made it public, neither had it tipped its hand as .to a basic strategy - for a wage round.

One notable aspect of the employers’ assessment is that it is even lower, than that contemplated by the Government. The . Prime Minister (Mr Muldoon) earlier this year suggested that about 9 per cent would be the most the Government would consider justified. The Employers’ Federation has stated its case in a paper which is being circulated to members of Parliament;/employers’ organisations, employers’ assessors, and to business leaders.

The paper begins baldly enough: "For the 1981-82 . wage round a" single-figure increased of 5 to-7'per cent.on the current level of wages is all that can be justified. It is a fair wage settlement,” the paper says. ’ According .to the employers, wages have risen in the last three years by about 60 per cent, compared with an over-all increase in.prices

Of 50. per cent. In the 12 months to June, this year, wages increased by 19 per cent, whereas the consumers’ price index rose by 16 per cent, they say. On top of these wage movements must be added the 5 per. cent general wage order which • applied from June 11, 1981.

“Apart from the effect of inflation, jobs are being threatened as wages outstrip prices and productivity,” the paper says. An example is given using two awards. The employers say that, based on minimum award rates, the wages of drivers in the last three years have moved ahead of prices by a margin of 9 per cent. The wages of process workers covered by the Metal Trades Award have moved ahead of prices by 7 per cent, and the wages of tradesmen covered by the same award by 5 per cent.

“This is true for most employees covered by awards." the paper says.

. "The Federation of Labour has said that a 14 per cent increase — over and above the 5 per cent June general wage order is needed to maintain, workers' real incomes.

"This is not true," the paper says. 'The F.O.L. figure of 14 per cent is a guess at the rate of inflation for the year ahead. No credibility is attached to that, figure, or to the logic of their argument. “To accept that wage increases should precede inflation would merely make price rises self-fulfilling,” the paper says.

The employers argue that even on the - F.O.L.’s own arguments, a 7 per cent

increase, at most, is all that is needed in this year’s wage round to keep wage and salary incomes level with prices through until June 30, 1982.

They say that this is because there have been so many, substantial wage rate movements in recent months that the wage and salary earner has yet to feel the full benefit in annual earnings.

If the 14 per cent claimed by the F.O.L. was applied to present rates, the rise in incomes by June next year would be nearly 24 per cent, the paper says. On the F.O.L. claim of 14 per cent, at least 24 per cent would have to be claimed in price rises, it says. The paper also says that the effect of the tax system on wages is not a matter for wage negotiations but that after-tax incomes have kept pace with inflation as well.

Tax cuts, adjustments in rebates, and family benefits have generally kept pace with inflation and the effect of inflation on tax scales has been neutralised by Government tax cuts, it says.