Manawatu Evening Standard. MONDAY, AUGUST 12, 1940. THE VICIOUS SPIRAL.

Manawatu Standard, Volume LX, Issue 217, 12 August 1940, Page 6

Manawatu Evening Standard. MONDAY, AUGUST 12, 1940. THE VICIOUS SPIRAL.

As from to-day all award wages have been increased by live per cent, by a general order of the Arbitration Court. Its judgment has been made in pursuance of powers conferred upon it by regulations recently issued, and following a complete presentation of the case for each side. His Honour has issued a very comprehensive review of the position, which will be read with the widest interest, particularly because of the implications of this judgment upon the country’s economy. His Honour has found that a ten per cent, increase in wages would give a weekly index approximately higher than ever before enjoyed by the workers of this country, without taking into account recent war taxation. “If an increase of five per cent, were granted, and no increase in the retail prices index occurred during the next six months,” His Honour says, “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.” The Court therefore found, while at the same time stating that it would be unreasonable to suggest a rise in the cost of living would not take place, that film per cent, was the maximum increase which could reasonably be justified from a study of the cost of living alone. The Court, however, had to consider the economic and financial conditions as~ they affected trade and industry, which were given precedence over the cost of living, and it was on this point that a particularly strong case was made for the employers, who called important and helpful witnesses. It held, however, that economic and financial conditions justified the increase.

Tbe effect of tbis judgment must be patent to everyone. It must be responsible for an immediate increase in costs in every direction, adding to tlie cost of living which lias risen steadily since 1935, and more noticeably since September of last year when war broke out. It was on tbis rise that the workers’ advocate principally based his argument which influenced the Court, but it must be accentuated by that decision. and so the vicious spiral of rising costs starts again. But the judgment affects only one section of the community, however large its numbers. Those on fixed incomes, including pensioners and people living in retirement, must endure these higher living costs from an income already substantially reduced by war and other taxation. ; They and the farming community and industries which already are faced with considerable burdens will be called upon to bear this added load, which will not be accompanied by any increase in production, _ the most important need of the times. The Court’s powers of inquiry were limited to rates of wages and did not \mfortunately cover hours of work. An increase in wages accompanied by a restoration of tbe former hours of work during the war would not have so adversely affected the community as the

Court’s decision must. And only a brief while ago the Prime Minister observed that wage-earners must “realise this is not the time for asking for increased wages and for standing pat on hours.” There is much to be said for Mr Prime’s trenchant observation concerning the manner in which the Court regarded the evidence of the experts called.for the employers.