WAGES INQUIRY

Evening Post, Volume CXI, Issue 120, 23 May 1931, Page 14

WAGES INQUIRY

EMPLOYERS' REPLY

'BATES CAN BE REDUCED'

STANDARD OF LIVING

'"At present a considerable reduction of wage rates can be made without impairing the standard of living, and I believe the immediate result of such a reduction will be a further fall in local commodity prices/ said Mr. T. 0. Bishop in the Arbitration Court to-day, when replying to the arguments advanced by the workers against the application made by the New Zealand Employers' Federation for a general order under the terms of the Finance Act, 1931, reducing by 20 per cent, the wage rales paid under the various awards of the Court. Mr. Bishop maintained that the view that reduced wages would contract the purchasing power of the community as a whole and so lead to further depression in trade was entirely fallacious. The employers were not seeking to lower the standard of living, but they could not escape facts. While a departure from the standard might be inevitable, they were convinced that it •would be only temporary. Mr. Bishop said at the outset that in the case presented on behalf of the employers the issues submitecl to the Court for consideration were reduced to a minimum. The case, summarised, was that owing to the fall of export prices the national" income had been reduced by about £39,000,000, or 27-J per cent. The burden of that reduction of national income had fallen most heavily upou one section of the community, and the power of that section to pur-chase the products and services provided by other sections had been diminished by 40 per cent, as compared with 1914. It was argued, therefore, that the reduction in the costs of all commodities locally produced for our own consumption must be brought more nearly into line with the prices of exports so as to enable producers of export goods to resume their normal consumption of the products of the socalled secondary industries. it had been rather difficult to reduce the -ease for the workers to similar simple terms. The large number of statements submitted had presented many aspects of the question for consideration, some of which were not relevant to the matters under consideration by the Court. The employers' case followed one broad line of argument. The advocates on the other side had devoted less attention to disproving the main argument than they had to pursuing minor questions of varying degrees of irrelevancy. ADMIRABLE SPIRIT. Before proceeding to deal in detail with the evidence and statements presented on behalf of the workers, Mr. Bishop said that where he found it necessary to point out to the Court reasons why he thought the testimony of witnesses was unreliable, and also where he had to contradict statements made by the advocates, he wanted it to be understood that he did not do so in any spirit of antagonism. He expressed appreciation of the admirable spirit in which the whole of the inquiry had been conducted, and thanks to the advocates on tho workers' side for their courtesy $nd moderation. Dealing with. Mr. Roberts's statement, Mr. Bishop said that the figures concerning the wages of waterside ■workers referred only to 400 men or about one-sixth, of the total number covered by the returns. The figures were stated to apply to the highest paid men but that could not bo right for the year 1930, as Mr. Roberta's figure of £3 12s a week was considerably lower than the average of about 2400 men for the five main ports during tho year. The increase in the manifest • tonnage and tho reduction in tho number of men employed per ton actually ■handled did not indicate a reduced lab- . our cost. In. late years petrol had been imported iv bulk and did not require waterside labour for its discharge. Coal had also been replaced to a considerable extent by fuel oil, which did not require labour, or very little. The reduction in the number of men was also influenced by the- limitation of the membership of tho waterside unions. Mr. Bishop pointed out that the cost of .handling cargo on tho waterfront bore no relationship to its value. The reductions in freight charges were an indication that employers of watersidelabour were prepared to meet the neccs- ■ sity for reduced handling costs as far as they wero able to do so. EFFECT ON THE FARMER. "Mr. M'Combs was at some pains to show that a reduction of wages would bo of no value to tho farmer," continued Mr. Bishop. "He worked out by a method not quite clear that a 10 per cent, reduction of wages would reduce the farmers' total cost by £4 4s per annum, and he says since- that applies to dairy farming where labour costs are highest per unit of production that it would apply with even greater force to any other class of farming. "I would refer the Court to the pamphlet on the cost of wool production prepared by tho lecturer on farm economics at the Canterbury Agricultural College, which was put in by Mr. Acland during the course- of his evidence. On page 1 of that pamphlet it is shown that, the working expenses per head of sheep carried ranged from 5s 6d to 16s 2d for different classes of sheep and in tho table of costs that the wages paid actually on tho farm ranged from 2s 3d to us 3d on an average for each group. It would appear, therefore, that on a sheep farm actual wages account for ' from one-third to one-half of the total working expenses, and this is noi; taking into account any wages apart fnini the farm itself. "Mr. M'Combs endeavoured to show that following upon the wage adjustment of 1922 the employers of New Zealand had made greatly increased profits and workers had received no benefit. Ho adopts a rough and ready method in his calculations, and refers to the added value less the wages paid to productive employees as tho gross profit. Mr. Bishop said that tho correct figures' showed the following facts:— Total Total Wages. Employees. & ■ 1920-21 .. 13,811,011 72,286 1921-22 '.. 13,677,376 70,31(5 1922-2,'! .. 13,764,584 73,662 1923-24 .. 14,573,441 77,601 1!)24-2.j .. 13,690,202 80,327 "Now what becomes of Mr.

M' Combs's £770,000 saving in wages, as between 1922-2 I! and 1921-22, and £1,570,035 for the two years 1022-23 and l!) 23-24, as compared with tho previous two years'? In actual fact the wages paid for the 1922-23 year, in which, as Mr. M'Combs says, Hie cut operated for 10J months, exceeded the wages paid in 1921-22 by £87,508, and the wages paid for the two years 1922---2-23 and 1923-24 exceeded those paid in 1920-21 and 1921-22 by £762,430, so that instead of tho employers saving and the workers losing one million and a half in wages in two years as tho result of the cut, workers actually received an increase of wages of over there-quarters of a million. Mr. -M'Combs is also incorrect in his calculation as to tlie increased gross profit, but as the error is only £58,337 it is not a serious one —for him. ... It appeared to me that Mr. M'Combs desired to create an impression that there was something quite improper in tho proportion of wages to value of output, but there is no justification for any such implication. In the tot.il value of the product there has to bo included the whole value of raw materials, the cost of power, heat, lighting, land, buildings, management, and all other charges incidental to production. Unless each one of these items is separately accounted for then the definite- relationship between wages and value of production cannot be fairly considered. The only test as to whether an industry is profitable or otherwise is that of net profit, and upon this subject Mr. M'Combs lias maintained a discreet silence." UNDER THREE HEADINGS. After commenting briefly upon the statements made by Mr. T. Bloodworth and Mr. W. T. Young, Mr. Bishop proceeded to reply to the workers' case generally. He thought it might be summarised under three headings—(l) Cost of living, (2) purchasing power, and (3) interest. "On the subject of cost of living, it was claimed that tho workers' standard of 1914 had not been maintained, and that any reduction of wago rates imposed now would mean a definite lowering of the standard. Iv dealing with this question I do not propose to go further back than 1922, because in its judgment in tliH wages case delivered iv May of that year the Court disposed of all the arguments that the wage was not in proportion to tho cost of living, and definitely lied the then ■adjusted wage rates to the ajl-groups index figure. That is true also of the pronouncement made in November of 1922, in which your Honour said: 'At tho present time we arc on safe grounds when we say that the position of the workers of New Zealand is better in comparison with that of other sections of the community than it was in 1914, and their net income is relatively higher.' In May, 1923, the Court found that the cost of living index figure had fallen sufficiently below the figure for the previous period by an amount equivalent to id 'per hour, or 2s per week, iv the male adult wage rate, but no order was made. In October, 1923, it was found that the index number had moved up slightly as compared with the previous number, and an increase of id per hour or Is per week in tho male adult wago was indicated. Again, no order was made, and tho workers were left with Is per week in hand. AVages were next adjusted in 1925 when the Court added id per hour to its basic rates because, iv the opinion of the Court, the general financial and economic outlook justified the granting of such* an increase." Mr. Bishop quoted tho yearly allgroups index figures from 1925 to 1930, and also the quarterly figures, and said that for six quarterly periods tho index number had been higher than the 1925 number, and for sixteen quarterly periods the number had been lower. The greatest rise above the 1925 number was 1.4 per cent.; the fall below that number, ignoring the March figure, was 11.8 per cent. PURCHASING POWER. "All the advocates on tho other side argued that a reduction of wage rates would reduce the purchasing power of the workers affected, and they asked the Court to consider two effects <jf the reduction, first, a reduced standard of living, and, second, a contraction in the power to consume. It is clear that there will bo no reduction of the standard of living unless the wago reduction is out of proportion to the fall in prices. Commodity prices havo fallen very rapidly in the last few months, and are still falling.' I submit that the effect of a wago reduction will be a further fall in prices just as happened in 1922. . . . Allowing for any possible error in .thesa figures it is safe to say that the cost of living steadily fell from May, 1922, until February, 1923, and it remained well below the level of May, 1922, until after December, 1923. When improved prices were obtained for export hi tho 1923 season there was a change iv the direction of the movcmo-iit and local prices began to,rise in sympathy. We should till be more than pleased to see tho same thing happen ugaiu." STANDARD OF LIVING. "I. do not wish to labour the question of standard of living. We all desire to maintain it at the highest possible level. At present a considerable reduction of wage rates can bo made without impairing the standard, and I believe tho immediate result of such a reduction will be a further fall in local commodity prices. It may, however, be necessary to reduce the standary of living temporarily, however much we regret having to face the necessity. All the advocates ou the other side stressed the view that a reduction of wage rates would contract the purchasing power of the community as a whole and so lead to further depression in trade. That view is entirely fallacious. In actual fact the purchasing power of-the community as a whole has been reduced by 27 per cent, owing to a reduction of national income amounting to some £39,000,000. Tho position is aggravated by reason of the heaviest loss falling upon one section of the community—the primary producers. The purchasing power of this section has been reduced by 40 per cent., and there is no way of restoring it. within our control other than by reducing the prices of tho commodities they used to buy so as to enable them to buy again. A reduction of wage rates will actually enlarge tho purchasing power of tho community as a whole if it leads to cheaper commodities. It did so in 1922-23, and it will do so again. EMPLOYERS' ATTITUDE. "There is one other statement of the other .side I .nust refer to," said Mr. Bishop in conclusion. "It hnss been argued that the employers aro seeking to lower tho standard of living. This is not so. We desire to maintain a high standard just as sincerely as does any worker iv the Dominion. We cannot escape facts. Whatever the standard of living, it must bo paid for out of the total value of our production. Tho value of our production having fa'lcu 00 per cent, of its value two years ago, wo can no longer pay the same price fur our living as we did two years ago. Tho price of the commodities which go to make up the standard having fallen, wo can maintain it at less cost than formerly and lower money wages aro required.

"It may, however, bo found impos siblo to fully maintain the standard of good times now that hard times have overtaken us, and a temporary departure from the standard may be inevitable. That it will be temporary only, I am firmly convinced. A wholehearted effort by all sections of tho people ot! New Zealand, put forward with goodwill and honest desire to secure the

good of all rather than personal gain, will bring about a. speedy restoration of prosperity.''