PURCHASING POWER

Evening Post, Volume CXXII, Issue 18, 19 October 1936, Page 10

PURCHASING POWER

A HIGH BASIC WAGE

MR. ROBERTS'S SUBMISSIONS

Before reading his statement, Mr. Roberts said he had not had the opportunity of collaborating with Mr. Robinson, and some of the figures might clash a little. However, working independently they had more or less arrived at the same conclusion as to the.cost of living and other matters connected with the basic wage.

As the average number of dependants per family was definitely provided in the legislation, said Mr. Roberts, the questions to be considered were the general economic and financial conditions affecting trade and industry, and the cost of living at the present time. After many years' research he had not found any guide as to what might be regarded as a fair standard of living or a fair standard of comfort, A great deal depended on locality, mode of living, and other matters affecting "family life. It was indeed doubtful if there was any reliable data available that would give details as to the cost of living of the average family in this country. The Government Statistician published figures as to the cost of living, but with thousands of other workers he' had found himself in the position of being unable to agree with them, in that' the figures did not tally with the actual, prices paid for food, clothing, shelter, and miscellaneous commodities. THE BASIC WAGE OF 1031. "What was generally v«iderstoodto be the basic wage in 1931 was £4 0s Bd, and, according to the diagram published by the Labour Department, the weekly amount allowed for expendi-j ture in each group would be as follows:—Food and fuel, £1 Us 4Jd; clothing. Us 4|d; miscellaneous, £1 Is 9Jd; rent, 16s ljd. In May, 1932, Mr. Justice Frazer, discussing the average family, stated: "We, in New Zealand, have reckoned only two children to the average family, but this is over the mark." It would seem, therefore, that the recognised basic wage of £4 0s 8d in 1931 was for something less than a man, his wife, and two children The Finance Act, 1936, prescribed that all workers were entitled to the wage level of 1931, so that the basic wage could not be below that level for a family of from three to four people. The basic wage at that time, however, was not nearly sufficient, and this must be obvious to everybody from an examination of the amounts allowed by the 'Court for different things. It was necessary that there be a substantial increase in the purchasing power of the wage and salaried -workers of New Zealand, first to bridge the gap between production and consumption, and, secondly, to enable the people to enjoy a standard of life equal to their ability to produce goods and services. Continuing, Mr. Roberts said that the intention of the Factories Act was clear that the minimum wage of an adult female worker must be £2. The Court could not, he submitted, allow any less for the housewife or the mother of a family, and it must allow at least the same for the adult male worker, making £4 a week. Then there was the maintenance of three children. It could not be denied that the cost in this respect would be more than that of maintaining one adult person, but assuming they could be maintained for £2, that would make the wage necessary t6. maintain a worker, his wife, and three children at least £6 per week. ' ECONOMIC AND FINANCIAL • ■ ASPECTS. ; Mr. Roberts said it was necessary to deal with the general economic and financial conditions affecting trade and industry in New Zealand to demonstrate to the Court, first, that low wages and salaries had had the effect of creating unemployment, lowering prices, and making the economic conditions of the country bad generally. Mr. Roberts, after • quoting statistics, contended that the reduction in the total value of the commodities produced in factory production and also in the added values clearly demonstrated that wage-cutting only served to make the people of New Zealand poorer, and that this.not only applied to the wage and salaried workers but to the factory owners and shareholders as well; To put it plainly, the loss in purchasing power caused by wage and salary reductions killed demand, strangled production instead of stimulating it, and created an unemployed army from factories alone of 8993 workers. It had also been stated, by the advocates for wage reductions in 1931 that a lowering of wages would help the farmers of New Zealand, but in the light of the experience of the past five years, could anyone say today that any farmer in this country had benefited by wage cuts? The plain facts were that the wage and salaried workers of New Zealand were the greatest purchasers of goods, and, whether the goods they puchased were produced in New Zealand or overseas, they could only be paid .for in the last analysis by the actual income received by the people in New Zealand. PRODUCTIVE CAPACITY. Mr. Roberts submitted that consideration, also should be given to the increased ability of the workers to produce goods and render services as compared with, say, 16 years ago. The added value per person today he calculated as approximately 50 per cent. Production per person had increased enormously in New Zealand in the last 16 years,1 but purchasing power had been reduced.: Therefore, this great gap between the productive capacity of the people must be bridged, and that could only be done by paying substantially higher wages and salaries. The gap, he declared, was demonstrated more, clearly in a report in the 1935 Year Book, from which he quoted. A table in the Year Book showed that from 1900 to 1931 the. increase per. head .of exportable goods, mainly foodstuffs, was £2.6.. In the four years ending 1933 this had increased to £5.46 per head. That meant that foodstuffs were exported in 1933 equal to. £5 10s per head of the population, which were required in New Zealand and Would have been consumed here if wages had not been reduced- in 3931. Wages reductions also affected imports,. A-failing, off in

imports of over £70,500,000 was shown when the import figures for the three years prior to the wage cuts were compared with those for the three years following 1931. As far as he could ascertain, the price of imports in 1934 as compared with 1930-31 changed little; for, although, there might have been a fall in prices, this was offset by the increase caused through the exchange rate and sales tax. While it was true that the value of exports had fallen off considerably since 1930, yet a comparison of the value of New Zealand's exports for the years 1932, 1933, and 1934 with the value of imports during the same period would show that on the basis of New Zealand's productive capacity as a nation the people we're not in receipt of incomes, whether wages, salaries, or from other sources, sufficient to purchase the goods and services to which they were justly entitled.AGGREGATE PRIVATE INCOME. A further illustration of the effect of reduced purchasing power on the economic life of the nation was the falling-off in the aggregate private income of the people of New Zealand. In 1928 the private income from all sources was £140,000,000. In 1931-32 it was £90,000,000 and in 1933-34 it was £100,000,000. First, there was a falling off of from £40,000,000 to £50,000,000 per annum in circulation, and in a country like New Zealand this must of necessity create unemployment, poverty, and general trade stagnation. It had been estimated that the distribution of' income was 60 per cent, wages and salaries and 40 per cent, from all other sources. If the income of 1933-34, which was £100,000,000, was compared with the income in 1928, which was estimated at £140,000,000, feere was a loss in circulation of £40,000,000 per annum, and the loss in wages and salaries included in this amount was £24,000,000. But this after all was not a true index of the loss in purchasing power through wage' reductions because there were the retailers,'wholesalers, houseowners, and others whose income was solely or partly derived from wages expended in the purchase of commodities necessary for the home. 'It was admitted that this would probably add to the .loss of income through reduction in wages and salaries by another £6,000,000 to £8,000,000.

The figures he had quoted were from the Year Book,- and his view was that they proved conclusively that an improvement in the economic conditions in New Zealand could only be obtained by paying higher wages' and salaries and increasing purchasing power; indeed the increase in wages during the past twelve months had tended to improve the economic conditions of New Zealand considerably, and he had no doubt whatever that a high basic wage would materially improve trade in this country. Wages were reduced in 1931 for the avowed purpose of improving economic conditions. The wage cuts had the other effect. Economic conditions became worse. The number of unemployed workers doubled in a very short time until finally the employers of labour, 'the producers of goods, and the workers alike suffered through the economic stagnation caused by the reduction in purchasing power of the wage and salaried workers. THE STANDARD OF COMFORT. In order to determine the basic wage he submitted that the Court must first ascertain:—(l) The commodity requirements of a family- of five people; (2) the prices of those commodities; (3) the wage necessary to purchase them; and (4) the ability of the people of New Zealand to produce the goods and services to supply the commodities required. For some time past, Mr. Roberts said, he had been making investigations as to rentals charged and the prices of food, clothing, and other requirements of a family. He submitted to the Court details of amounts for food, clothing, house rent, and miscellaneous items which he claimed as being absolutely necessary to maintain five people in a reasonable standard of comfort. From the figures quoted by Mr. Roberts, the weekly expenditure necessary for a family of five people worked out as follows:— House rent, £1 ss. Food, £2 55.. Clothing, £1 3s 7d. Miscellaneous, £ 1 6s. Fuel and light, 7s Bd. Total, £6 7s 3d. The worker should be entitled to save something each week and this amount he suggested at 4s a week. Mr Roberts emphasised that he had not overstated anything in his schedule of prices. The only question he submitted, for the Court was: Was the productive ability of New Zealand such as would give the workers the basic wage he had set out? He suggested that the Court should take into account also that the wages earned by the wage and salaried workers were expended within New Zealand or that the goods they produced'were exchanged for goods from other countries. A high basic wage could not, therefore, impoverish New Zealand. _ Rather would it enrich it, for it meant higher purchasing power, more employment, and more buoyancy *n'£ a£ c' an2,X ness generally. It might be said that be had over-estimated the commodity requirements of a family of five people, but he was a family .man and he knew from nte experience that he had understated the expenditure. The benefits of increased production by the machine and ncw^ processes could only be given to the worker through an increased basic W jjuoh would enable him to buy for himself rndhis dependants more «f the^necesvaries of life. It was absurd to talk of a 1914 standard, a 1930 «*»*«*. « even a 1931 standard. Smcc 1914 pioduction per person employed, aided b> the machine, had increased by 100 per cent but the living standards had not by any means increased correspondtogl^ t£ wage and salaried workers were the great factors in the Production and distribution of goods. They mm - T^S?^Sd lStillo'a.m.tomorrow.. , ' ~