BENEFITS OF ENTERPRISE

Evening Post, Volume CXIV, Issue 63, 12 September 1932, Page 6

BENEFITS OF ENTERPRISE

That money spent on labour was of greater benefit to the county than other expenditure was an opinion expressed by the chairman of . the Makara.'. County' Council. He said that labour costs last year were £2350j and '£8926 was found for other purposes. The report does not show how-the calculation was made ■—whether "labour" meant wages for day labour or included salaries and other administrative. charges. We may assume that the "other purposes" expenditure includes office rent, plant, and materials, interest on loans, and the hospital levy. But even so the division may be disputed.If borrowed money has been spent partly in wages, the interest on the loans is (to that extent) only a deferred charge for labour. Payment for materials and plant is also an indirect charge for labour, r though a quarrying contractor or a motorlorry builder may be the link between the County Council and the men who draw the wages. It certainly does seem strange that' a small county, having, no need for expensive technical..... direction, should 'have "other costs".more than three times its- wages bill, unless, perhaps, so much has been borrowed and spent in the past that there is now a heavy drain oh. revenue to meet capital charges!5 ■' ■'■'.". . ■■ r! '-;.■',■ \'■_';:

f "We draw attention to the statement, however, not to question the accuracy of the chairman's calculation, but to point to a fallacy which is gradually coming to be accepted as fact—that direct wages costs are the measure of an industry's benefit to the Dominion. This be.lief has arisen because of. the conditions "governing unemployment relief works. On such works, where the main purpose is relief, it is certainly'advisable to see that the money finds!its way as speedily and directly as'possible to the workers. The less spent on overhead costs the better. But this principle is not applicable to permanent public or private'enterprises. With such works there are other factors that must be taken into account. The usefulness of the work must not be ignored. The expenditure on material, especially if. that material is a .local product, is also of first importance. Nor-should it be forgotten that the salaries of highly skilled workers, technicians, and others quickly find their Way into circulation just as do the wages ■• of unskilled workers. It is quite wrong to consider such costs as money m'is° spent. Certainly overhead charges may r i S e top high, but it is possible also to. practise false economy by trying to keep overhead too 10w,.50 that the enterprise suffers for lack of supervision and' expert direction. I his is a-point which should be remembered in these times when'the tendency is ,to suggest that, money which is paid in higher salaries is an extravagance. If too.much parsimony is attempted in this way the result may be waste through illplanned work, spoilt material, and misdirected labour.