"CUT" IN SALARIES

Evening Post, Volume CXI, Issue 41, 18 February 1931, Page 10

"CUT" IN SALARIES

A UNITED PROTEST

"AN UNFAIR BUKDEN"

Representatives of every section of the Civil Service waited upon the Prime Minister (the Right Hon. G. W. Forbes) to-day in reference to the proposed 10 per cent, "cut" in the salaries of all servants of the State. It was submitted that the "cut" would place an unfair and intolerable share of the Dominion's burden on State employees. In his reply, the Prime Minister said that he had announced his policy, and whether it was endorsed or not was a matter for Parliament. The deputation was not open to the Press, but a copy of tho statement made on behalf of the service by Mr. A. Burgess, president of the Public Service. Association, was subsequently handed to a representative of the "Post." There were about thirty members of the deputation. The statement submitted by Mr. Burgess was as follows: — \ "This deputation, representing the Public Service Association, tho Educational Institute, the Post and Telegraph Employees' Association, the Railway Officers''lnstitute, tho Amalgamated Society of Railway Servants, the Bailway Engineers, Firemen, and Cleaners' Association, and tho Railway Tradesmen's Associatiou, tenders its thanks for tho opportunity offered of placing it,s views before you on the question of the proposed reduction of 10 per cent, in the wages and salaries of those employed by the State. "It is recognised by the associations here represented that the unpleasant duty has fallen upon you of balancing the Budget in a time of depression, and wo wish to say that State employees as a body are ready to boar p. fair share of the burden, provided it is shouldered by tho whole community. "To a previous deputation from tho State employees you stated that your Government was working upon the principle of equality of sacrifice for all seclions of the community, and this was reaffirmed in your statement given to tho Press on 1-ith February. "UNFAIR AND INTOLERABLE." "We wish to respectfully point out that tho proposal to reduce State.paid wages and salaries by 10 per cent, is one which puts an unfair and intolerable share of the burden upon State emp)o3'oes. In support of this carefully weighed assertion we offer the following reasons: — (1) Tho anticipated deficit for the financial year ending 31st March, 1932, is £• 4,500,000. The total number .of people in receipt of salaries or wages may be estimated at 450,000 (see 1931 Year Book, p. 841). The number of State employees is estimated at 50,000; that is, tho State employees are onejiinth of the wage earners of the Dominion. But this one-ninth is to be asked to provide one-third of the expected shortage of £4,500,000, as well as meeting their share of the £850,000 proposed to be raised by taxation direct and indirect. (Sec published statement.) (2) It is a well-known principle of economics that if equal sums are added in successive increments to a given income the utility of the successive increments gradually decreases; the converse of this is that tho loss of equal amounts in successive stages represents gradually increasing sacrifice. This deputation would respectfully urge that the principle of equality of sacrifice demands the exemption of tho lower-paid workers from, further reduction of their economic standard. Wo submit that no other course is possible in the.pursuit of equity. TWO "CUTS" ALREADY. (3) Tho Public Servants' salaries wore reduced by two cuts in 1922 because of a similar national emergency. If these salaries had been "tied" by awards to tho cost-of-living figures, tho cuts would have been restored in 1923, which you yourself admitted when a former Government was in office. Award wages, interest, rents, and profits were allowed to share in the time of comparative prosperity from then until 1928, but the cut operated unceasingly against Public Servants. We also submit, Sir, that Public Servants' incomes for the last nine years have been low in comparison with other incomes. The present proposals would lower by a serious amount that which is already too low. (4) The present proposals are contrary to all tenets of justice and principles of equity, for the principle of '■■quality of sacrifice should carry with it equality of opportunity to share in better times. But our bitter experience is that the reduced salary is taken as tho normal figure when the country returns to prosperity. The result is lhat all the cumbersome machinery of Parliamentary procedure has to bo set in motion when State servants again seek to have their incomes adjusted to the increasing ]ocal prices which inevitably follow improving markets for the exports of tho Dominion. THE COST OF LIVING. (5) There can be no certainty that award wages and other wages will be reduced by 10 per cent. Parliament may give power to tho Arbitration Court to xevinw wages, but presumably will not dictate to the Court the precise amount of the reduction. If the Court bases its award on cost-of-liying figures it may happen that wages will_ not be reduced; they might oven bo increased. Even if award wages were reduced t>y 10 per cent., and if all other wages and salaries were equally reduced, it is not to be asserted that the cost of living would •fall iv proportion. If New Zealand were a self-contained and commercially isolated country, such a sensitive response of living costs to wage movements could be expected, but tho fact, is that our living costs in respect to the food and clothing groups arc not governed to any appreciable extent by local wages, but must rise and fall- in sympathy with world prices. We suggest, Sir, that a rather ingenuous interpretation of tho quantity theory of money vitiates the argument that costs would inevitably follow wages on the down grade. In tho past the cost of living has actually increased, while Public servants' salaries wore being reduced. (C) The Government can have no effective statutory control over the rate of interest (which- is governed chiefly by London rates) nor of profits (which are governed by competition among the employing classes) and a general reduction of wages may be tho only result of the Government's proposals. (7) One other aspect should not be overlooked; that is that a large number of State servants have entered into financial commitments on tlie present Tate of remuneration. A salary cut would ruin many of them. "In. conclusion, Sir, wo would urge that serious reconsideration be given to the proposal for reducing Public Service salaries, partly because of the nebulous nature of tho consequences upon other wages and costs, but chiefly because of the injustice of expecting a small section of the community, which has already had a drastic salary reduction inflicted on It, to carry one-

third of the burden of balancing the Budget for tho next financial year." In his reply, the Prime Minister said he had announced his policy, and whether it was endorsed or-not was a matter for Parliament to decide.