Escalation clause removed from all Govt contracts

Press, 13 November 1985, Page 6

Escalation clause removed from all Govt contracts

By PATRICIA HERBERT in Wellington

The Ministry of Works and Development confirmed yesterday that the escalation clause protecting contractors against award wage increases had been removed from all Government contracts.

A spokesman said letters had been sent to both the Master Builders’ Federation and the Contractors’ Fed-

eration last month advising them that the move would affect them also. The measure was introduced in response to the electricians’ settlement which established 15.5 per cent as the going rate in the wage round. It was jointly announced by the Minister of Finance, Mr Douglas, and the Associate Finance Minister, Mr Prebble, on October 17 and was construed then to apply only to the electricial contracting industry. This was because it, and only it, was referred to in the statement. “It has become clear to us that employers under the electrical contractor’s award wanted a high award because, under existing Government tenders, they can pass on higher wage costs direct to the Govern-

ment,” the Ministers said. Mr Prebble indicated, however, that similar initiatives would be taken against other industries should they invite them by conceding high pay increases. T ‘lt is clear that this wage round will also throw up other problems which will need to be dealt with,” he said. The executive director of the Master Builders’ Federation, Mr Les Street, said yesterday that the Ministry had advised him of the change and that the federation’s management council would discuss it when it met today. He did not know whether any formal response would be made. The president of the Contractors’ Federation could not be reached for comment yesterday.