Wage claim cost ‘$1 billion’

Press, 18 March 1983, Page 11

Wage claim cost ‘$1 billion’

PA Wellington . The Federation of Labour-Combined State Unions $2O a week wage claim would cost employers $1 billion annually, the Employers’ Federation has said. The federation's executive director, Mr J. W. Rowe, said the claim, if agreed to, would also increase prices and unemployment, as well as Government spending on public servants’ salaries and unemployment benefits.

It would result in fewer goods sold, both overseas and within New Zealand, because of higher prices needed to meet higher costs of production. “The country's ability to pay is the critical factor, Because productivity is not increasing and the economy is not growing there is no capacity to absorb such a wage increase,” he said.

Mr Rowe said increased labour costs would increase redundancies. Those already out of work would have even less chance of finding a job because employers would be less inclined to take on new staff. He said the F.O.L. and C.S.U. argued that an increase in wages would mean an increase in spending power, and therefore consumption. “They say this would benefit employers because they would be able to increase production to meet the increased demand. This is not correct because of higher costs." Mr Rowe said.

Increased wages in the absence of productivity growth would simply mean increased costs and prices, which would negatively correlate with employment growth.