REDUCING EMPLOYERS' WAGES

Evening Post, Volume CX, Issue 78, 29 September 1930, Page 8

REDUCING EMPLOYERS' WAGES

(To the Editor.)

Sir,—The deputation which waited upon the Acting-Prime Minister on Thursday last, urging a reduction in wages, evidently failed to realise that they were casting a boomerang, which would hit. nobody harder than it would hit themselves. Most of them have already suffered from the prevailing slump, but without any knowledge of who —or what —hit them. Let us look back tor :i minute at past experience. Only a few years ago business was brisk, employment was abundant; and spending was comparatively lavish. But there were those who wanted to get rich too quick. They raised their prices, thinking thereby to increase their profits; but the increased prices lessened the consumption, with the result that the producers did not pet their share of the good times; and, with a lowering of consumption, production naturally fell off, with the result that unemployment followed, and that unemployment was the cause o£ still more unemployment, reducing the aggregate turnover of, commerce and industry. It could only be expected such causes should lead to hard times, the end. of which is not nearly in sight. Every reduction' in the aggregate pay out of wages has brought about a corresponding reduction in the turnover of commerce and industry, according to the circulating value thereof. Now wages pay wages out of wages, but not only that, wages pay the employers' wages, and it tho workers' wages (and salaries) are reduced, tlicu the employers' wages _ must be reduced in consequence, for if^ the workers cannot consume so much 01 the employers' products 'as formerly, it follows logically that there cannot be bo much from which the employer can draw upon for his wages. There are those, we know, who will not be satisfied . until wages are reduced to 5s a day, and butter selling at 4d per lb, with other things1 m proportion, but that does not spell national prosperity, but instead—increased taxation. . ■ The wealth and prosperity ot the country is invariably spoken of .in terms 01 exports, as if that were our only trade outlet. But this is a totally vrrong and misleading view to take. If we look at our national dr. and cr. turnover, we must soon realise that this amounts to 'roughly £2,500,000,000 per annum, and it is on this huge national turnover that our commerce and industry depends. Export markets must always be variable, but our internal trade is just as constant as we choose to make it by our liberality m the aggregate payment of wages. Take away our internal trade, and with a slowJy but continuously falling ' export market, and the nation would be quick in bankUlSHppose that in Wellington, 40,000 workers had their wages reduced by an average of 5s per week, what would be the result? The aggregate saving would be £10,000 per week. Taking the circulating value of that money into consideration, commerce and industry would have its aggregate- turnover reduced by £100,000 per week. What would such a loss meau to them? „ „.. Again, where would this loss chiefly iall. In the first round of its circulation, £3000 would probably fall on the farmer, and £7000 would fall on the secondary industries. Could these industries stand such a loss without causing further unemployment? Such a reduction would not only be felt by our national services, thus causing a loss of Government revenue, but taxable incomes would be much reduced, thus creating the need for further taxation. It you won't pay wages, you must pay Let this fact be clearly understood. The aggregate pay-out in wages and salaries to the workers dominates the total of the employers' wages, and it also dominates the turnover of commerce and industry. Under these circumstances, it , becomes more clear every day; that we need a broader outlook, new- views, newer methods, if we are to escape the calamity that now threatens: to overwhelm us.— I am, etc.,

W. MADDISON.