THE New Zealand Herald AND DAILY SOUTHERN CROSS. MONDAY, MAY 16, 1921. THE COST-OF-LIVING BONUS.

New Zealand Herald, Volume LVIII, Issue 17782, 16 May 1921, Page 4

THE New Zealand Herald AND DAILY SOUTHERN CROSS. MONDAY, MAY 16, 1921. THE COST-OF-LIVING BONUS.

The latest pronouncement of the Arbitration Court on the vexed bonus question is more favourable to the workers than would, appear on the surface. Taking the sixmonthly moving average of retail prices for the period October, 1920, to March, 1921, the Court finds that the figures would entitle the workers to an additional bonus of 3s a week during the current six months. This system of determining the wage level is, as has often been pointed out, far from perfect. The statistics supplied to the Court are a record of prices only, and undoubtedly exaggerate the actual cost of living to thrifty people who vary their dietary by including more of the relatively cheaper foods. Further, the figures, being an average for six mouths, do not show the full force of the recent decline in the cost of living. | Both objections are valid in themselves, but since this system of j determining bonuses has the sancj tion of usage they are not now relevant. If the method adopted by the Court had the effect of keeping wages always a little behind the increase in the cost of living, the workers are fully entitled to follow a little behind its fall. As a measure of social justice the workers have a claim, within the limits of what is economically practicable, to an additional bbnus of 3s a week, together with the 2s due to be revived in their favour. In proposing to stabilise wages at their present level for a year, the Court is apparently depriving wage-earners who come within its jurisdiction of an immediate increment of 5s for a period of six months and indemnifying them, so far as it can control the future wage level, against a reduction in the second six.months of the statistical year.

The proposition is worthy of closer examination. It should be observed, to begin with, that the latent bonus of ( 2s is, as a matter of strict accountancy, not due for revival for another four months. The workers were overpaid by 2s a week for ten months, from January 1 to October 31, 1920. The same amount has been deducted for only six months, so that the assumption made by the Court that it is again payable is a theoretical concession in the workers' favour. The Court's equalisation policy is based upon the supposition that "the six-monthly moving average to be ascertained at the end of the current period will represent a decrease at least equal to, and probably greater than, the increases for the last two periods." This, of course, is nothing but a'.speculation, but it is as inherently probable as any that may be made, and it "is on this assumption that the Court's arrangements must be examined. The increase shown for the.. MarchSeptember period of last year was 7s a week—though to correct previous over-payments the bonus declared was substantially less-=-and for the last six months 3s a week. The Court, therefore, plans to deny the workers 5s a week for six months and to obviate for the second six months a reduction of 10s a week. If this can be carried into effect there will be no appreciable loss to wage-earners, who must admit, on impartial examination, that the machinery for wage - fixation employed in New Zealand during the period of fluctuating prices has been as efficient as that in use anywhere. That there have been anomalies goes without saying, but they have not all been to the disadvantage of labour. If workers complain that wages have lagged behind prices employers may with justice retort that a bonus based on the cost of living of a family of two adults and two children puts money into the pockets of the single man, and that if they had not had to pay bonuses to 100,000 hypothetical wives and a quarter of a million non-existent children they could have met the present claim for a further increase and also have dealt more generously with the breadwinners oif large families, who have been the real victims of high prices. The new stabilisation policy of the Court is a confession that economic law is stronger than the law of the Arbitration Court. It may be the confession is overdue; certainly it could not have been postponed much longer. Six months ago a different president declared that he had the gravest doubts as to whether the further raising of wages was justified. Since then the economic position of the Dominion has undergone a change for the worse. The prices of our exports, which eventually determine our national wages fund, havft fallen and the imported goods against which local manufacturers compete have become cheaper. It would be the height of folly to raise j wages all round at a time when they J are tumbling the world over. The virtual insolvency of British coalmining is due to the forcing up of wages when the price of export coal was declining and the adoption of a similar policy in New Zealand could produce only unemployment and the closing down of industries. Miners are not the only workers in the United Kingdom to suffer reductions of wages. During February a quarter of a million workers outside j the mines accepted lower rates, and last month half a million railwaymen went on to a lower scale. I n addition there were the reduced earnings of those who, like cotton operatives, were working short time In the United States the same readjustments are being made, and it may be anticipated that in both countnes they will continue at an accelerated rate. This world-wide phenomenon suggests that it may not be easy to keep wages in all at their present level ir^

New Zealand for another year. Nevertheless there is a moral obligation upon employers to honour the intentions of the Court and attempt to maintain wages and employment undiminished. If they succeed it may be prophesied with confidence that the fall in prices will increase effective wages very materially before the period is ended.