The Dominion MONDAY, JUNE 1, 1931. THE ARBITRATION COURT'S AWARD

Dominion, Volume 24, Issue 209, 1 June 1931, Page 8

The Dominion MONDAY, JUNE 1, 1931. THE ARBITRATION COURT'S AWARD

Whether directly concerned or not, everyone would do well to read the memorandum, published this morning, by Mr. Justice Frazer following his judgment on award wages. Because of the terms of the legislation empowering the Arbitration Court to review and vary wages by general order and also because of the lines on which the Court has developed in the past, the Judge’s argument necessarily is wide in scope and touches many of the nagging economic questions of the day, in an interesting and informative way. One need not agree with all the premises or conclusions but still may gain from the memorandum a better perspective of the problems New Zealand is facing and the solutions offered. If people will squarely face the issues as impartially stated by Mr. Justice Frazer, the majority will agree with his conclusion that a reduction in money wages is inevitable. There will be differences, of course, as to the percentage by which they should be reduced, not only to bring the costs of production down to an economic or competitive level, but also, which is the true interest of the worker, to restore an effective demand for labour. On the data quoted by the Judge, it may be seriously doubted whether a reduction of. 10 per cent, will meet the position as stated by him. There will be little question about the medicine but considerable difference as to the size of the dose. It has to be remembered that in New Zealand we have become accustomed to the admission of all sorts of irrelevant considerations in the fixing of wages. We talk about what is fair and equitable, about a proper standard of living, the “right” to work and a living wage, we bring in the cost of living and so on, but all these matters are beside the point. The proper and only sound basis of wages is the productive value of labour. When we get off that basis, various mal-adjustments follow, the most conspicuous and onerous being unemployment. High prices for labour, like high prices for anything else, restrict demand and the market can only be restored by lowering wages to the point where it is worth while, or to where it pays, to hire hands. Although Mr. Justice Frazer spends a lot of time discussing the other relations of wages, he seems to admit that in the final analysis their true basis is productive value. Thus he says that “wages are, in the ultimate analysis, paid out of the proceeds of production” and he goes on to point out that “the proceeds of production are barely two-thirds of what they were a year or two ago.” But in spite of that and of the fact that “the capita! losses on representative industrial and commercial stocks during the past 18 months have been from 20 to 50 per cent.,” he fixes the deduction from workers at only 10 per cent. That means that most other classes must suffer greater deprivations proportionately than the workers. The Judge is concerned for what will be fair and equitable to the wage-earners but if that means injustice to others (working farmers, for instance), we may continue to suffer mal-adjustments which will react on the workers until they are corrected. This argument is clearly stated by Mr. Justice Frazer himself as follows:— If wages are artificially maintained at an economically impossible level, unemployment and the competition of imported commodities with our own manufactures will increase, fresh capital for further development of our industries will not be forthcoming from profits, and recovery will be delayed. Primary production, which depends very largely nowadays on the adoption of modern methods, will fall back, because of the lat;k of funds with which to farm the land scientifically; and the principal source of our national income will become still further depleted. If mal-adjustment exists, as a result of changed world conditions, it must be corrected before we can expect to get back to a sound basis; and no sophistry can disguise the truth of this proposition. It may be hoped that the reduction of 10 per cent, in award wages will make the desired correction in our economic system although it would seem, on the'data available, that some improvement in commodity markets is required before a proper adjustment can be held to have been made. At any rate, paradox though it seem, the cut should improve the lot of workers generally. For, to quote Mr. Justice Frazer, “the reductions in award rates of wages in New Zealand necessitated by the depression of 1921-22 were followed within two years by an increase of 7345 in the number of workers employed in manufacturing industries and an increase of £896,065 in the amount of wages paid.” From the wage-earners’ viewpoint also, the reduction in money wages should soon be compensated by the fall in prices due to lowered costs of production. It may prove, indeed, that the worker will suffer no reduction in real wages or his standard of living. In any case, as the Judge’s memorandum shows without need of further demonstration, a reduction of money wages was necessary and inevitable in present economic circumstances unless great inequalities were to be suffered. All the sophistries that the trades unionist advocates brought forward at the hearing cannot get round the simple proposition that since the national income is reduced there is less to go round and each of us must be content with less money, although its purchasing power may before long be as great as heretofore.