Productive base ‘whittled away’

Press, 2 September 1981, Page 13

Productive base ‘whittled away’

PA Wellington The productive base of New Zealand is being whittled away by wage and salary earners taking a progressively greater share of the national income, says Mr J. W. Rowe, executive director of the Employers’ Federation.

“Shares of national income have swung dramatically in favour of wage and salary earners since the mid-19605,” he said. "In 1965, labour rewards absorbed 64 per cent of national income and capital 36 per cent. In 1981, the labour share is estimated at 79 per cent and the capital share at only 21 per cent. "This represents a dramatic shift away from the productive base into the hands of the wage and salary earners.

“At the same time, in the last few years wage increases have’ drawn substantially ahead of price in-

creases. During this period, the economy has hardly grown at all. So what we are seeing is a situation where wage and salary earners are improving their position at the expense of the unemployed, those on fixed incomes, farmers, businesses, and so on. "Our growth and our unemployment depends on the ability of business to provide both, but wage and salary earners to a large extent have squeezed business so much that growth is almost impossible, and employment opportunities are minimised. “Those in jobs are doing very well, but the price we as a country are paying is high unemployment, high inflation, and a stagnating economy.”

Sectional interests had to realise what they were doing to the country by demanding a bigger share of the “national cake," Mr Rowe said.