RISING COSTS

New Zealand Herald, Volume LXXIII, Issue 22476, 21 July 1936, Page 10

RISING COSTS

EMPLOYERS' PROBLEMS FUTURE PRICE LEVELS LESSON OF THE SLUMP PROTECTIVE MEASURES SOUGHT An assurance that the Government could stabilise prices at any level it fixed, so as to give a fair return to employers, was sought in a statement last night by Mr. ,J. S. Dawes, president of the Auckland Employers' Association. He said there would be serious results if employers could not rely upon higher prices to meet increased production costs. " If the Government is sincere in its expressed dssiro to obtain the assistance and co-operation of the employers, which is obviously essential to the success of any industrial reorganisation," said Mr. Dawes, "it must be prepared to take them more fully into its confidence as to the practical steps by which their objective is to be attained.

" There appears at present to be a determination to ignore the actual earning power of labour in fixing wage standards; to enforco in competitive industry conditions which are uneconomic, but which are possible, and no doubt politically expedient, State services which are either monopolistic or non-revenue producing; to start again the vicious circle of rising wages and rising prices which ended so disastrously in 19.31. Questions For Government

" The questions on which employers require enlightenment therefore are:— " (1) Has the Government, in making its pronouncement that the workers must receive a more equitable share of the values they produce by their labour, ascertained what percentage they now receive? If they accept their own statistician's figures this was some 49 per cent in 1931, and public utility enforces over 57 per cent. As they contend this was inequitable, will they give the employers an indication of what percentage they consider 'equitable.' " (2) Does the Government realise, and is it prepared to admit, that conditions in State services and in competitive industry are so utterly dissimilar that no comparison can be drawn between them, as the wage fund in the latter case can only be drawn from the sale of products and must depend on the marketable value of such products, whereas the former can bo raised by rates and taxation? "(3) Doos the Government rcaliso that if it takes the responsibility of arbitrarily raising costs of production it must also accept the responsibility of protecting the higher prices which must inevitably follow? Prices and Tariffs " If the present Government can convince employers that it can stabilise prices at any level it may fix, and is prepared to fix that level to afford an equitable return to employers after meeting increased costs, then it will have established a valid claim for assistance and co-operation. Without this assurance employers naturally fear that what happened in 19.31 may happen again, and the lesson Ihey learned in those slump years is not one they are likely to forget. " The manufacturers' section of this association wants to know what time will elapse after the increasing of costs before some adequate protective tariff is brought into operation. Not only manufacturers but others want to know what protection they will receive against tnoso who employ little or no labour. A high basic wage will almost immediately load to further increases in unemployment, besides being cruelly unjust to young people wishing to get a start in industry. Practical Policy Essential

" Admitting that wo have not yet had the Government's industrial policy in its entirety, and that we have been promised during the session now opening legislation which will directly encourage industry and enable it to employ more labour, we are nevertheless justified in issuing a warning that repercussions of a very serious nature must follow unless employers can rely on higher prices to meet the increased production costs for which the Government is responsible. If the Government persists in considering industry from only one side, that of the labour unionist, its legislation may well defeat the objects at which it aims.

" Economic facts cannot be ignored on the ground of political expediency, and to obtain the confidence of employers the Government must bo prepared to show that its policy is a practical one, logically reasoned out from ascertained facts." CAUSE OF DISMISSALS DECREASE IN TURNOVER A TEMPORARY DEVELOPMENT Several industries which advanced prices becauso of added labour costs have failed to gain a full recompense thereby, it is reported, and in consequence dismissals of hands arc taking place. However, it is also pointed out that it is too soon to judge the situation, because tho increased spending power by the public which the Government proposes to bring into operation has been realised to a limited degree only.

Sections of the laundry, dyeing and pressing industry are said to be affected in the manner described. A representative of a firm in the industry admitted that since rates were advanced to meet a 22] per cent rise in labour costs business in liis concern had dropped to an extent that negatived any increase in cash turnover. However, some such result was anticipated until the public generally had moro to spend. "Things Avill find their own level," he remarked. He ascribed dismissals in his own firm as being duo to seasonal causes rather than to tho effects of tho recent legislation.

One effect of recent legislation, and also of proposed legislation relating to industrial planning, is that some groups of employers have instituted tariff lists. It has been found in some instances that customers have in consequenco sought business with concerns outside the group, but hero again it is stated that such a result had been anticipated until the general situation developed in the way that was inevitable as the result of Government legislation.