AWARD WAGES INCREASED

Manawatu Standard, Volume LX, Issue 217, 12 August 1940, Page 2

AWARD WAGES INCREASED

ORDER FOR S PER CENT. ADVANCE

ARBITRATION COURT’S DECISION

Per Press Association

CHRISTCHURCH, Aug. 11

Tlie Arbitration Court bas increased all award wages by 5 per cent, as from to-morrow. The Court’s pronouncemen is as follows :

“In pursuance and exercise of tbe powers conferred on 1 by tbe Hates of Wages Emergency Regulations, 1940, omd o every other power in that behalf thereto enabling it, this Lour , having had regard to, and taken into consideration, the several matters and'things as required by the said regulations, do hereby order as follows:

“(1) That the several awards and industrial agreements (including agreements filed with the Clerk of Awards to section 8 of the Labour Disputes Investigation Act, 191 d) now in force shall be amended in the manner following, that is to say, all rates of remuneration, including time and piece wages, and overtime and other special payments provided lor in the said awards and industrial agreements now in force, shall be increased by an amount equal to 5 per centum thereof. “(2) That the several apprenticeship orders made by the Court under section 5 of the Apprentices Act, 1925, now m force shall be amended in the manner following, that is to say, all rates of remuneration fixed by the Court by apprenticeship orders shall be increased by an amount equal to 5 per centum thereof.

“(3) That this order shall operate and take effect on and I from August 12, 1940.”

JUDGE'S MEMORANDUM

RESULTS OF INCREASE

Mr Justice Tyndall's memorandum says that under the Rates of Wages Emergency Regulations, 1940, the Court is required in making an'initial general order to take into account; (a) The economic and financial conditions affecting trade and industry in New Zealand; (b) the cost of living; (c) all other considerations which the Court deems relevant. On May 20, 1940, an application for a general order under the regulations was made by the New Zealand Federated Painters’ and Decorators’ Industrial Association of Workers on the grounds of the increase in the cost of living. After several adjournments at the request of the applicant association, the hearing was commenced on July 12 and completed on July 22. The substance of the workers’ claims was that all rates of remuneration should he increased by a percentage not less than the percentage of increase in the cost of living since September 7, 1937, the date on which the most recent wage pronouncement of the Court was made. This percentage was first of all stated bv the advocate for the workers to be 9.6. but the figure was increased before the end of. the hearing to 10.6 because of the issue in the meantime of later official statistics. The all-groups index numbers for retail prices prepared by the Government Statistician were adopted by the workers’ advocate as the basis for calculating the increase in the cost of living. The employers opposed the application on the grounds that no increase in rates of remuneration could be justified bv taking into account either the cost of living or the econom'c and financial conditions affecting trade and industry in New Zealand. The representative of the workers (Mr J. Robinson) called no evidence, but relied almost e-ntirelv on the official statistics prepared by the Government Departments. The advocate for tlm employers (Mr D. I. Macdonald) called several witnesses ah of. whom gave important and helpful evidence. ATTITUDE TO SPECIAL TAX. “During the hearing,” continued the memorandum, “several, references were made to the recent increases in taxation imposed specially for war purposes and to the extent to ■which this taxation will burden the workers. The Legislature imposed special taxation subsequent to the promulgation of the Rates of Wages Emergency Regulations and, indeed, subsequent to the filing of the application now under consideration.

"An examination of the position discloses that if a 10 per cent increase in the rates of remuneration were now made effective the weekly wage index would reach a level approximately higher than that ever before enjoyed by the workers of this country, not taking into account, however, as previously indicated, the national security tax and other special war taxation just imposed. “If an increase of 5 per cent were granted and no increase in the retail price index occurred during the next six months the effective wage index during that period would be identical in value with the highest figure on record, namely, that for the calendar year 1938. “It would, of course, be unreasonable to suggest that no increase in tire cost of living will take place during the next six months, although it is a fact that the retail price index for June shows a slight reduction in comparison with the May figure. If-it is assumed, however, that the retail prices index will progressively increase in-a manner comparable with the increase during the past six months, then a 5 per cent increase in the nominal rates of remuneration will result in an effective wage index almost identical in value, with the average level enjoyed by the workers over' the past three or four years.

“It appears to me, therefore, that a 5 per cent increase is the maximum which can be reasonably justified from a study of the cost of living . position alone.” The other chief matters which the Court was required to take into account and which were given precedence of olnce over the cost of living in tlie regulations were the economic and financial conditions affecting trade and industry. It was on this phase of the question that the case of the employers was principally founded. ECONOMIC FACTOR. The views of the employers on the economic and financial conditions affecting trade and industry and their relations with the changes in the cost and standards of living were brought out in voluminous evidence tendered by three witnesses. The principal witness in j this phase of the inquiry stressed very strongly our dependence, upon export receipts for out prosperity and general standards of living. , His Honour referred to a table included in this evidence, a striking feature of which, he said, was the heavy drop in the estimated value available for local consumption for the year ending March 31, 1940, as compared with the official figures for the two previous years ending June 30. This was primarily due to the very substantial decrease of approximately £11,000,000 ill the value of imports. It was debatable whether one assumption made by the witness would be realised, namely, that the value of production for home use would be no more in 1939-40 than the figure for 1938-39, but, as lie commented in his evidence, it appeared very improbable that any expansion that might have occurred would Jie sufficient to offset the decline in the value of about £11,000,000 in imports. EXPORT POSITION. “Since had been heard, however, the actual figures of exports and imports for the year ending Juno 30, 1940, had beeu published. If the' Court adopted the assumption of the employers’ witness that production for home use had been of the same valuo as fpr the previous year the position for the production year 1939-40 would show as follows (in millions of pounds) :

“Parliament, in its wisdom, has already determined the manner in which the financial war burden is to bo distributed over various classes of the community, and if the Court of Arbitration, in dealing with the application for a general order, were to take into account the impact of special taxation on the workers then it would in effect be reviewing the decision of the Legislature. I do not propose, therefore, to take into account national security tax and other special taxation primarily imposed'and specifically earmarked for war purposes.” The workers had selected September 7. 1937, as the bas : c date from which to assess the increase in the cost of living. September 7, 1937, was the date upon which the then Judge of the Court made the most recent pronouncement of the Court. It was necessary, however, to distinguish between the nature of that pronouncement and the nature of the general order under the Rates of Wages Emergency Regulations. DELAYED BENEFIT. The pronouncement was purely a voluntary statement by the Court, designed to give an indication of its policy in subsequent years in dealing with industrial disputes and to assist employers and workers in reaching an agreement on conciliation proceedings. No actual wage rate in any award or industrial agreement was increased on September 7, 1937, as a direct result of tho pronouncement, and a very large proportion of the workers did not, and were not intended to, receive the benefit of the policy announced on that date by the Court until some time in 1938, and in some cases not till 1939.

‘Estimates only based on assumption that production for home use is unchanged. It would be seen that the position in regard to exports was very healthy, the value being the highest for any production year on record and that the apparent trade balance was 19. S millions, also a record figure. “A substantial increase in exports,” Mr Justice Tyndall’s memorandum continued, “according to the evidence submitted on. behalf of the employers, can be expected to be followed by a substantial expansion in the following year of sheltered production for the local market. In normal times it would also be followed by an increase in imports. A combination of the expansion of sheltered production for the local market avid an increase in imports would, of course, increase the value available for home consumption which value influences our standard of,living. POSITION IN BRITAIN.

It was quite obvious that the presiding Judge was fully aware of the fact that the bulk of the workers would not receive the benefit of the new policy for some considerable time, as in his memorandum he endeavoured to prophesy for an appreciable period ahead the future movements in trade and industry. Some of his anticipations, as had been quite properly pointed out by the employers’ advocate and his witnesses, did not fully materialise. “I cannot accept tho contention that the Court, for the purposes of the present inquiry, must necessarily gauge its consideration of the cost of living by tlio rise in the retail price index since September 7, 1937. I would further point out that the Court is not directed in the regulations to limit its investigation to the period since the war commenced or any other period. It my view, therefore, that the Court should rather take into account the relationship between the retail price index and the nominal weekly wages received by the workers from year to year.

“Another point which must affect our economy is that, following the considerable rise in the cost of living, wages in Great Britain have been substantially increased during the past, nine months. This development must tend to inflate the value of our imports from Great Britain. On the other hand, while Great Britain is doing her utmost to maintain her export trade, it is likely that, due to tho

industrial war effort, many orders for goods will not he fulfilled. “What then is the immediate outlook? We must first of all realise that such colossal forces are at work throughout the world conspiring to derange all existing trading relations that it is impossible to make a prediction with any degree of certainty for even two weeks ahead. Our economy is merely a pawn in the game. “Nevertheless looking at the conditions as they stand to-day we find that, first of all, there are indications that tlie value Of our production for 1939-40 must have been high. The value of our exports reached a record figure. “In view of the earnest appeals which have been made repeatedly to the people of the Dominion by our political and industrial leaders, any expression of opinion to the effect that those appeals have fallen on deaf ears and that production for 'the.- current production year will not he maintained or increased, would border on the subversive.

“The immediate outlook for our exportable products is generally satisfactory in so far as any conditions can be prophesied as likely to be satisfactory under the most extraordinary conditions which now prevail. It, of course, must not be forgotten that our present economy depends on the maintenance of existing overseas shipping facilities. “Another disturbing matter upon which the witnesses for' the employers laid particular stress is the menace of margarine in the British market. This may be a serious, problem, for the future, but no convincing evidence was given that it was likely to affect our position to any grave extent during the next six or twelve months. REDUCED STANDARD.

“With regard to factory production in New Zealand all indications point to an increased output during the current year provided adequate supplies of raw materials are available. On the other hand, the war must be paid lor and a reduction in the standard of living for the, people of the. Dominion as a whole is inevitable.

“The extent of that reduction so long as Britain is able to purchase our produce at present prices and our shipping facilities are maintained is principally influenced by our production. I feel it is not out of place for me to stress to the utmost the necessity for increasing our productive effort. The withdrawal of man-power from industry for military service necessitates greater individual effort to maintain production. To increase production involves a still greater effort. “Taking into consideration all the factors mentioned in the regulations, and with my reference in the preceding paragraph in mind, I am led to the conclusion that the cost of living and the economic and financial conditions affecting trade and industry in the Dominion are at the moment suen as to justify an increase of 5 per cent, in the rates of remuneration THE VICIOUS SPIRAL.

“The principal witness for the employers submitted with some weight that an adjustment of wages to rising prices in wartime increases the internal costs both of production and of the Government,, hampers production, increases the difficulties of war finance, raises the cost of living, leads to applications for further wage adjustments, and starts moving a vicious spiral of costs and prices which is the commonest form of inflation.

“In spite of these views, the average rates of wages in Great Britain, as. shown by the wage indices, have been substantially increased since, the ;'outbreak of war in an endeavour to keep within measurable distance of the inI crease in the cost of living. Further, within the last two weeks the Press has reported similar action in Australia, although in that country the increases are in both eases more numerate than in Great Britain.” The order now made represented the decision of the majority of the Court. MR MONTEITH’S VIEW. Mr A. L. Monteith (for the workers), while not, dissert ting, wished to record the following opinion: “Since September 7, 1937, on which date the Court announced its standard wage rates, the cost of living (all groups) figures give an increase of 10.6 per cent, to May 31, 1940. It is correct to state that these standard rates did not become fully operative for (in my opinion) about IS months. It is also true that the workers willhave to face increases in the cost of living for another six months before any further relief can he given by way of a general order. It is also a fact that tlie cost of living since the nutbreak of the war has increased more quickly than was the case during the 18 months above-mentioned. I have carefully considered all these differences, and, taking into consideration the fact that our trade balance is very healthy, I am of opinion that an increase of 1\ per cent, should he awarded. However, so that the workers can get some immediate relief I am recording my opinion, but am not recording dissent from the order now made.”EMPLOYERS DISSENT. Mr W. Cecil Prime (for the employers) dissented from the decision of the majority of the Court. Mr Prime records a lengthy dissenting opinion which he summarises as follows:

“I cannot accept His Honour’s statement that 5 per cent, is tho maximum which can he justified on tile cost of living basis alone. In my view, for reasons I have given, the maximum which any attempt could he made to justify would he 2J- per cent.

“Neither can I accept the contention, that the large value of exports with, the consequent high trade balance tor the past year justifies the optimistic outlook as to the prospects of an-in-ereasc in production for home use. In the first place, the trade balance, large as it was, was insufficient to wipe off the deficits in the preceding two years. In tho second place, there has been so much, pdlitical interference with economic forces that normal stimulation of local production of labour has been withdrawn for military reasons from productive enterprise. Even the 2J per cent, therefore cannot be justified.

“In conclusion, I feel compelled to sav that, in my opinion, the facts and conclusions put before the Court by witnesses would seem either to have been largely ignored' or, where they could not bo ignored, have been given interpretations which do not bear ■ a sound relation to all the facts. I am bound to point out that no witness was called to support the arguments adduced bv the advocate for the union. On the other band, three expert witnesses gave evidence in support of the contentions of the employers. These were, first, a professor of economies who has an unsurpassed acquaintance with ail the aspects of New Zealand’s financial and economic position; second, a businessman who had successfully piloted through the effects of two depressions one of the largest businesses in New Zealand; while the third witness is an outstanding figure in the world of dairying. The facts put forward by these witnesses were not challenged nor their conclusions shaken, yet the finding of the. Court is that they were wrong. In my view they were right.”

o «* 3 c . o o o ei 3 o o ° o O 3 £ O 2 3 O J2 s 2 c> ° « g B g §4 X H si P.K o a M r— 0) £ £ £ £ £ 1939-40 . .. 143.2* 65.8 77.4* 46.0 123.4*