INFLATION PERIL

Evening Star, Issue 25439, 21 March 1945, Page 7

INFLATION PERIL

CAN CONTROL BE MAINTAINED ? SURVEY OF WAGE PRONOUNCEMENT POSSIBILITIES (P.A.) WELLINGTON* March 20. " The situation which exists under the latest amendment to the Economic Stabilisation Regulations is fraught with danger to the economic equilibrium," said Mr W. Marshall, a former member of the Stabilisation Commission, when discussing the Arbitration Court's pronouncement regarding standard minimum rates of pay in an interview to-night. He said that if stabilisation could be held even at ■ a higher level we should have a degree of inflation higher by the amount by which the increase in money in circulation exceeded the available goods and services. That was to be regretted. ". A more serious question, however, is, can control be maintained? " Mr Marshall added. " The Arbitration Court will be deluged with applications for variations of awards, and because the wages and salaries of those not covered by awards must be allowed to rise, the wages commissioners will also be flooded with applications. Administratively it will not be possible to hold all costs by subsidy, even if that were desirable. Prices must, therefore, rise, and we may find a quick up-surge in costs. "As the regulations now stand, if there is a rise of 2£ per cent, in the cost of Jiving on the level at December 15, 1942, as measured by the wartime cost of living index, the court must grant a 5 per cent, increase in the rates of remuneration. As small increases in costs could cause such a rise, we could conceivably have a further 5 per cent, increase in wages m a few months. Furthermore, a rise sufficiently to bring about such an increase since December J 5, 1942, has been avoided only by the expenditure of some millions 'of pounds on subsidies, and the question arises whether this will, continue and whether by so doing an attempt will be made over all to improve real wages by 10 to 13 per cent. "In my opinion," Mr Marshall continued, "such a policy, while the present shortage of consumable goods continues, would lead to extensive black marketing and become disastrous for persons in the lower paid groups. It may be the intention of the Government to bring down further amendments and to provide that the cost of living as measured shall be equal to the percentage increase in wages in the court's pronouncement. If this is done there will, be a time lag in price rises favourable to the consumers at the cost of the taxpayer, but time will be provided in which to establish control at the higher level. This is by far the most serious aspect of the influence of the present developments. on the stabilisation plan, and an early announcement is of the utmost importance. " There are other matters, too, which have to be taken into account in the fight, which we should continue to wage against inflation, such as possible legislation to repeal the second schedule to the Factories Act and make the 40hour week universal, the revocation of the modification order dealing with the provisions, of sections 14 and 15 of the Factories Amendment. Act, 1936, which, if revoked, would require all work done, on statutory holidays to bo paid for at treble rates and on Sundays at double fates, even if it is done 'as part "of the 40-hour week. " These things are being talked about, and as they would provide a further-increase of costs, before they are decided upon a full discussion should-take place," Mr Marshall concluded.