Wage order calls likely to be countered

Press, 5 October 1984, Page 1

Wage order calls likely to be countered

By

MICHAEL HANNAH

in Wellington

Calls for an immediate general wage order are likely to be countered by the Government at two crucial meetings to be held next week.

The Federation of Labour can expect to receive then the reply it has been awaiting to a letter of August 8, in which it demanded a $l5 a week wage rise from October 1, as part of a package to help workers earning less than $lB,OOO a year. Indications are that the F.O.L. will be told that tax relief promised for the November 8 Budget should be judged first and that efforts will be made to start the first post-freeze wage round before the starting date of next March or April predicted by the F.O.L. It is not certain, however, how strong the Government’s resolve is to restrain a wage rise before wagebargaining restarts. Any serious delay in starting the wage round is expected to increase pressure on the Government to provide immediate wage relief, and this argument has received support from Mr Len Bayliss, a consultant economist. Mr Bayliss told “The Press” that, without wage relief before the next wage round, if it started next

March or April, some people would suffer “Draconian” drops in income, which would result in a drop in living standards beyond 5 per cent. He suggested a wage order of 3 per cent be included in the November 8 Budget, although he said that the Government’s aim should be to restrain wage increases as much as was politically possible. The Government’s stance is likely to be aired at the next meeting of the tripartite wage talks, scheduled for next Wednesday evening. The Prime Minister, Mr Lange, will attend the meeting, along with the Minister of Finance, Mr Douglas, and the Minister of Labour, Mr Rodger. His attendance — his first at the tripartite talks — is regarded as significant if only because the talks will, according to one source, “get down to the nittygritty” of the transition measures to be taken before the first wage round is negotiated under the new wage-fixing system agreed

to before the Economic Summit Conference. Before then, however, the F.O.L. will have put its case for an immediate wage order to the Joint Council of Labour at a meeting called urgently by the F.O.L. secretary, Mr Ken Douglas. This meeting has been arranged hurriedly for next Tuesday after Mr Douglas expressed concern about a comment by the Minister of Finance last Sunday. Mr Lange will also attend the Joint Council of Labour meeting, and Mr Rodger is also expected to be present, although it will be chaired by the president of the Labour Party, Ms Margaret Wilson. Approached yesterday, the F.O.L. was sticking to its demand for an immediate wage increase, the employers were opposing this proposal and arguing for the promised tax relief and an early start in the New Year for a wage round, and Government sources indicated a reluctance to move before the Budget is presented.

Another factor which will play a part next week is the release of the September quarter consumers’ price index, due by the end of the week. Expected to show a rise above the June quarter inflation rate of 4.7 per cent, the September C.P.I. figure is likely to be measured against the last statistics on decline in real wages of 0.6 per cent between the March and June quarters. The next statistics on real wages are not due until mid-Novem-ber, after the Budget, when they could be expected to provide fuel for further debate on wage relief if the Budget tax relief is perceived as too small. Mr Ken Douglas said yesterday that the F.O.L. preferred to see an immediate wage rise first, and then Budget tax relief to take account of this. To this end, a $l5 a week wage increase would be applied, but tax relief should ensure that those earning less than $lB,OOO should get most if not all of this relief, while higher income earners should get nothing. The F.O.L. had also asked for wages to be indexed against the C.P.I. for the last quarter of this year and the first two quarters of 1985, or at least until the wage round got under way, he said.

“If that is not done, it will be July, August, September before private sector workers have a wage increase, and further from that when State workers get an increase,” he

“We have said that a continuation of the wage freeze is as unacceptable under the Lange Government as it was under the Muldoon Government.”

Asked whether a 3 per cent wage order would be acceptable, Mr Douglas said this was the same as the $l5 a week wage rise on the average wage, but the F.O.L. was opposed to percentage increases as they benefited high income earners “who don’t need that sort of increase.”

He rejected a suggestion that a flat dollar rise would affect relativities, as relativities were affected by basic hourly rates, and not by total gross earnings. “If a tradesman is getting $25,000 to $30,000, that question is dealt with by rates of taxation. Relativities are a blue herring,” he said.

Mr Jim Rowe, executive director of the Employers’ Federation, rejected the call for an immediate wage rise, arguing that this would erode the benefits of devaluation. The federation, moreover, favoured having the Budget presented first, then a round of tripartite talks before wage-bargain-ing got under way possibly first thing next year. Mr Rowe said it was “conceivable” the wage round could start before Christmas this year, although the tripartite talks were unlikely to finish before December.

In spite of the Minister of Finance’s comments, the Cabinet is known not to have yet adopted a view on a general wage order. But there are strong indications

that the Government would prefer the trade unions to see its Budget tax measures — which could also hit highincome earners’ fringe benefits — before discussing interim wage rises.

Private economists have said the present tight monetary policy, which has resulted in high interest rates and therefore expensive credit for businesses, is unlikely to endear employers to any wage rise before the wage round proper starts. The Government’s position, however, may rest on how soon the wage round commences, and it was this point which Mr Len Bayliss referred to when he supported a 3 per cent Budget wage order. Mr Bayliss maintained that any wage rises, however, should come from company profits and higher productivity. Companies, he said, had done very well in the last year, but they should not necessarily raise

prices to cover wage rises. He believed the Government should free up competition in the commercial sector to provide an incentive for companies to absorb costs. “There has to be economic restraint. The question is by whom,” he said. “Profits and fringe benefits and industry subsidies are going to take a fair amount of the knock, as well as exporters who are expected to be doing better.”