FLOW OF INCOME

Evening Post, Volume CXXXII, Issue 75, 25 September 1941, Page 8

FLOW OF INCOME

WORK AND WAGES

REVIEW BY A BANK

CHANGES IN WARTIME

Reviewing some outstanding changes in Australian economy during two years of war, the National Bank of Australasia makes special reference to the large increase in employment since 1939. This increase, as in May, 1941, was 7.2 per cent, over returns as in August, 1939. The figures are 2,278,000 for 1941 and 2,125,000 for 1939. Occupational percentages show that —for a great primary producing country, as Australia is—defence and factory employment have greatly increased since 1939; Government munitions factories employment increased by 333.3 per cent.; private factories, 13.3 per cent.; all factories, 20.3 per cent.; and other employment, 2.7 per cent. The "other- employment," presumably, almost wholly comprises industries and commercial enterprises engaged on civil production. "This result is most satisfactory from the point of view of the war effort," remarks the bank, "and indicates that the great bulk of new employment since the outbreak of war has contributed either directly, or indirectly, towards the production .of military needs. DEMAND ON MAN-POWER. "The indirect contribution must not be neglected, as many of the newly employed in both civil and defence industries have replaced other workers transferred to war production. Nor is it to be assumed that all those reemployed since 1939 were unemployed wage- or salary-earners in that year. There has been a steady reinforcement of wage-earners from the ranks of those not normally engaged in industry and commerce, and this tendency can be expected to continue, and even accelerate, as the war makes greater demands on our man-power as a whole." RISE IN INCOME. Expansion of Australia's national income since 1939 is also observed. It was thought to be flowing at the rate of £800,000,000 to £850,000,000 per annum in 1938-39; but "reliable estimates indicate that the rate of flow in 1941----42 should approach £1,000,000,000 per annum, an increase of 17 to 20 per cent." Difficulties of adjusting money values to price movements are acknowledged, but the bank believes that not more than one-half of the increase of 17 to 20 per cent, in the money value of the national income should be attributed to price movements, explaining that "the remainder clearly represents an additional output of goods and services, most of which, if the figures of. employment are any guide, has been for military purposes." MONEY AND PRICES. The national wages bill of Australia has risen with increased employment and national income. Mr. Menzies, exPrime Minister, is quoted by the bank as estimating the addition of £150,----000,000 to the national wages bill since .the outbreak of war, and of this amount about £50,000,000 was added on account of upward revisions of price movements, "the balance of £100,000,----000 representing a net gain) to wageearners as a .whole." ""■'■'■ ' " Dealing with . the offset of higher prices against "higher income, the National Bank remarks that "to date, in Australia, remarkable success has attended the efforts of the Government to" keep the rise in prices to a minimum," and that "after more than two years of war" an increase in retail prices of 9 per cent, since June, 1939, must be considered very moderate. The review closes: "If the Government's financial policy involves a largescale use of credit expansion, civil buying power will be augmented, and, failing resort to a drastic application of rationing, or other means of reducing civilian spending, the mechanism of price control may be severely strained." I