Mr Douglas wants pay moderation

Press, 7 October 1985, Page 1

Mr Douglas wants pay moderation

By

DAVID PORTER,

NZPA staff correspondent Seoul

A strong plea for moderation was issued by the Minister of Finance, Mr Douglas, on the eve of the reopening of Drivers’ Union award talks.

Mr Douglas warned that unemployment and reduced profits for business would result if wage settlements were too high. He emphasised that he was not suggesting a level at which the award should be settled.

However, the reported 15 to 16 per cent sought by the drivers, after the lead set by the electricians of about 15 per cent, could upset the Government’s monetary policy based on 10 to 13 per cent nominal income growth. “The parties need to take that into account,” said Mr Douglas, who was in the South Korea capital for the annual International Monetary Fund-World Bank meeting. “We are not suggesting a level — we are simply spelling out what the consequences will be if wage settlements are too high. “The simple fact is there are certain economic reali-

ties we have to face in New Zealand — we have done the worst of any O.E.C.D. country over the last 10 years. “We have made the adjustments and put in place the policies that will mean we can once again have real income growth. But the real question is whether we will get that real income growth with or without pain.” If wage settlements were too high, union leaders would be actually voting to put their members out of work, said Mr Douglas.

It would also mean management putting themselves out of business or substantially reducing their profits. Mr Douglas said inflation was coming down and should be less than 3 per cent this quarter. Annual inflation was 16.6 per cent based on the June quarter figure, he said.

The strong New Zealand dollar, which went to over US5Bc last week, would help bring inflation down.

But Mr Douglas acknowedged that the dollar’s strength was hurting exporters. He would not speculate on future movements of the dollar, saying it would find its own level.