PLIGHT OF INDUSTRY.

New Zealand Herald, Volume LXVII, Issue 20743, 10 December 1930, Page 15

PLIGHT OF INDUSTRY.

TRICE LEVELS AND WAGES.

NEED FOR A READJUSTMENT. ) ARBITRATION COURT'S POWERS. ADVOCATES OF A NEW BASIS. Signs are not lacking that the condition of trade and industry in New Zealand will at no remote date bring under urgent notice the necessity for a careful revision of wage levels. Economists seemed agreed that the present depression is not of the ordinary type, which may be -expected to be followed shortly bv a period of prosperity; the indications are rather that prices and profits are falling to a permanently lower level, comparable with the years before the war. The problem thus arises as to how lalnur costs in production can most smoothly bo adjusted to conform with the new order. It./is generally recognised that capital has recently been called on to bear an increasingly heavy burden, many companies having had their share values reduced from between 20 to 50 per cent. So far, there has been no reflection of this in the. Arbitration Court's awards. It has to be remembered, however, that the policy of the Arbitration Court in New Zealand differs from that of the various industrial tribunals of Australia, inasmuch as the award rates in New Zealand ai'e true minimum rates in the

majority of cases. In Australia the rule has been to make the minimum the maximum. When proof was , submitted to an Australian Court that/ a number of employers in any industry were paying some or all of their employees a higher rate than the minimum rate provided by the appropriate award, the Court accepted the circumstance as a ground for increasing the award rate. In New Zealand, however, the Court has regarded such a state of affairs as detrimental to efficiency, inasmuch as the payment of the same wage to a highly efficient worker as that paid to a mediocre worker tended to a general levelling down of the standard of efficiency by depriving the more industrious and "efficient worker of the incentive supplied by a higher wage. Working on a Wages Margin.

The declared policy of the Arbitration Court in New Zealand is that the minimum wage in any industry is to he sufficient to reward the worker fairly for the skill and labour required of him, but is not to be so high as to preclude the employer from paying higher wages to the more deserving workers, or from paying higher wages to all his workers in times of prosperity. Similarly, the minimum wage has in each case been fixed at such a level as not, to he oppressive to employers in periods of depression. In other words, the minimum rates of wages have been fixed at a level that will allow a. margin on which the employer can "come and go" without it being necessary to make application to the Court for reconsideration of its wa£;es scale in ordinary periods of trade depression. Fo/ some years past, it has been found that, in' the majority of trades, employers generally have been paying a. considerable percentage of their workers more than the award rates, but during the past 12 months the margin has been availed of, and an increasing percentage of workers are now on or only slightly above the minimum rate. Cost of Living Factor. Wages in Australia are still based on the cost of living, and rise or fall in mathematical accordance with the movements of price levels. In New Zealand the Court treats the cost of living as a factor in the assessment of wages, but it is regarded as only one of a number of factors. The other matters which the Court takes into consideration are the general, financial and economic condition of the country and of trade and industry generally, the prosperity or otherwise of the particular trade or industry with which the Court is dealing at the time, and any other conditions which, ill the opinion of the Court, are relevant to the issue. During the latter part of the war period and the early post-war years the Arbitration Court was empowered to increase or reduce wages in accordance with the movement, of the cost of living, and it, effected these adjustments at. sircrnonthlv intervals. The legislation was amended and renewed on a number of occasions, but, finally expired at the end of 1925. Since then the Court, has had no po\yer to vary the rates of wages during the currency of an award unless with the consent of all parties. The only way in which the employers in any trade or industry could seek a reduction in wage rates, under their awards would be to wait until' an award expires, and then apply for a new award with lower rates of wages. The. onus of proving that,,circumstances had so changed as to warrant the Court in granting the application would he on the applicant in such a. case. i General Eeview of Awards. The objections that have bpen advanced to dealing with wage levels, in such piecemeal fashion might be summarised as follows (/I) A reduction in earnings for the workers in a single trade or in a single district would press hardly ori those particular workers while others remained at the former wage levels. (2) Until a considerable number of such adjustments had been effected, there would be no appreciable diminution in the general cost of production. (3) The Court, in dealing with an isolated trade, would probably not. have all the material before it. to enable it to make a. comprehensive survey of the genera] position, a circumstance which might cause such wage reductions to be larking in uniformity. If the legislation which expired in 1923 were revived and, if thought necessary, modified to meet present conditions, the Court could deal with a representative case in which employers and workers generally would take part. The Court would then be in a. position to give a compre-. hensjve judgment on the whole situation, and make a general order applying to all trades and industries under its jurisdiction.

The advocates of such a procedure claim- that, that method would mean less sacrifice to individual workers, because the

drop in money wages would immediately ' be reflected in lower production costs, with a corresponding diminution in the cost of living, so that real wages, measured in purchasing power, would remain at or near their present level, while industry generally would derive an immediate benefit from a, general reduction of labour costs in production. A //policy of careful revision of wage levels, calculated in accordant o with the circumstances of the general situation, will, it is considered, help to bring about the necessary readjustment without involving .any section of the community in special hardship. It is notorious that the prices of primary products have fallen to an extent that has been described as alarming and disastrous. Although there may lie a slight recovery, it is too much to hope for any substantial recovery, and it is/axiomatic that there cannot, for any lengthy period, be a great disparity between the prices of primary products and the prices of manufactured goods. In time one must fall to the level of the other, or both must meet on a common level. Hence arises the absolute necessity for the equation of wages costs to production fpsl&