THE New Zealand Herald AND DAILY SOUTHERN CROSS MONDAY, JANUARY 23, 1928. THE ARBITRATION SYSTEM.

New Zealand Herald, Volume LXV, Issue 19851, 23 January 1928, Page 8

THE New Zealand Herald AND DAILY SOUTHERN CROSS MONDAY, JANUARY 23, 1928. THE ARBITRATION SYSTEM.

The system of industrial arbitration, as practised in Australia and New Zealand, has been under fire again. In June of last year Mr. Justice Frazer said: —"Twelve months ago the unions were attacking the Court. To-day it is a section of the employers. I suppose it is due to a little depression in the country." Now the broadsides come, not from unions or employers, or, in particular, farmers, but from the economists attending the conference of the Australasian Association for the Advancement of Science. Consideration of the system should have been more detached, and criticism more moderate than could .be expected from those to whom Mr. Justice Frazer was referring. On the whole it was. If the economists saw little in the arbitration Bystem to commend, they did not indict it sweepingly. The practical addendum to an academic discussion, supplied by one speaker, was, as will appear presently, not only mild, but inevitable,, Examined, the discussion proves to have been more about what the Court has done than about arbitration as a method of handling industrial disputes. This is important. The first Industrial Conciliation and Arbitration Act laid down no principle for the guidance of the Court. In New Zealand it has had to establish its own criteria for fixing wages, and th roughout it 3 history it, for the most part, has been given a free hand to make what settlements it has pleased. Arbitration as a principle was formally embodied in the law of the land. As a system it has been shaped by those composing the Courts. They, naturally, have been influenced by circumstances.

Mr. Justice Frazer suggested depression in the country to explain the criticism the Court had experienced. This "condition, which certainly existed when he spoke, is in direct contrast to that ruling when arbitration was first established. The Act began to operate just at the beginning of a period of rising prices, which dates back roughly to 1896, and lasted for some ten or twelve years. It was that period which enabled New Zealand to be truly called "a land without strikes." Wages rose steadily. Commentators have hastened to point out they must have done this, Court or no Court. This is true, but without the twin systems of conciliation and arbitration it is doubtful whether there would have been as smooth and peaceful a process of adjustment. To pass over intervening years, the present time, or its very recently preceding period, has been one of unsatisfactory prices, affecting New Zealand s staple pi oducts sold in the markets of the world. The result is serious complaint, especially from farmers, because wages, now regarded relatively to a standard of living, have not been reduced to a degree corresponding with the fall in prices. It is true few workers paid directly by the farmers come under arbitration awards. The legislation recently proposed included provisions to remove all workers in primary industry from the control of the Court. This did not meet , the principal grievance of the farmers. Their main contention, supported to some extent bv the economists in conference, is that, if wages generally arc maintained at their old level in face of falling prices, the farmer suffers because, with smaller returns for his own labour, he pays just as much, or more, for the necessaries of life, and the material he uses. It is demonstrably true that the primary producer can be prejudicially affected in this way by protection of wages, as he can be bv protection of commodities. Tf either is applied injudiciously, the reaction upon him can be a verv serious one.

Speakers at the conference said the Court maintained wages in sheltered industries at an artificial level, unsheltered industries were affected to some extent by the standards set, and the farmers suffered. This has been the contention of the farmer, too, though not expressed in quite so direct a manner. The observation about the success of workers in sheltered industries in resisting wage reductions despite general depression is not confined to New Zealand. It

has been noted in Britain that, workers in the building trades and in the ! transport industries—typical examples of naturally sheltered industries —have fared much better in depression than the iron and steel workers, the miners in export districts and others who helped to supply a world-wide market. From this example it appears that the arbitration system has not been the sole factor introducing inequalities. In Britain, for instance, the housing shortage, with its consequent high rents and congestion, was quoted as a hardship falling on a depressed nation because the "sheltered" building operatives were able to bargain • successfully for a bettqf remuneration than those who could not ignore the blasting effect of worldwide competition. There is no arbitration system there. The means by which agreements have been reached, producing on the whole a similar relative position between the sheltered and the unsheltered, as New Zealand shows, has not been preferable to arbitration. Until very recently it has been through the strike, or the strike threat. The move toward peace and conciliation has been made because the results of collective bargaining, with the bludgeon in reserve, are recognised to have been calamitous. No example worth following is provided. The upshot is that New Zealand would be very unwise to jettison the existing system without some other of greater promise being definitely in sijiht. This was recognised at the Scientists' Conference, when it was suggested that it would be risky to make drastic changes in the industrial legislation of Australia and New Zealand, both having the system of arbitration so firmly established.