COSTS AND WAGES

New Zealand Herald, Volume 82, Issue 25157, 21 March 1945, Page 8

COSTS AND WAGES

TREND IN DOMINION „ INFLATION DANGERS » FIRM CONTROL NEEDED d (0.C.) WELLINGTON, Tuesday IS "The situation created by the latest amendments to the Economic Stabilisae tion Regulations is fraught with danger s to economic equilibrium," said Mr W. e Marshall, chairman of directors of the v New Zealand Co-operative Dairy Co,, - Ltd., and a former member of the Stabilisation Commission, tonight, when dis- * cussing the Arbitration Court's pronouncement on standard wages. s Mr Marshall said that if stabilisation 3 could be held even at a higher level - there would be a degree of inflation, * higher by the amount in which increases " in money in circulation exceeded the j available goods and service, that was j to be regretted. "Prices Must Rise" r s "The more serious question-is: Can ' control be maintained?" continued i\lr } Marshall. "The Arbitration Court will be deluged with applications for various awards, and because wages ami salaries of those not covered by awards , must be allowed to rise the' Wages Com- - missiouers will also be flooded with f applications. Administratively, it will not be possible to hold all costs by sub- [ sidy even if that were desirable, there- | fore prices must rise r and we may find | a quick upsurge in costs. t "As the regulations, now stand, it . there is a rise of 2$ per cent in the i cost of living on the December 15, 1941., , level, as measured by the wartime cost of living index, the Court must grant . a 5 per cent increase in rates of remun- ; eration. As small increases in costs . could cause such a rise wo could con- * ceivablv have a further 5 per cent in- > crease in wages in a few months. Furthermore, a rise sufficient to bring about such an increase since December ; 15, 1942, has only been avoided _by ; some millions being paid in subsidies. and the question arises whether this ' system will continue in an attempt to . improve real wages bv 10 to 13 per . cent. Black-Marketing Danger "In my opinion such a policy while the present shortage of consumable I goods continues would lead to exten--1 sive black-marketing and become disastrous for persons in the lower paid groups. It may be the intention of the * Government to bring down further i amendments and to provide that the ;cost of as measured by the wartime cost of living index, can rise by 21 per cent, plus an amount equal to : the percentage increase in wages in the Court's announcement. If this is done there will be a time lag in price rises favourable to consumers at the cost of the taxpayers, hut time will be provided in which to establish control at a higher level. This is by far the most, serious aspect of the influence of present developments on the economic stabilisation plan and, an early announceriient is of the utmost importance. "There are other matters, too," said Mr Marshall, "which have to be taken into account in the fight which we should continue to wage against inflation, such as possible legislation to repeal the second schedule of the Factories Act to make .the 40-hour week universal; the revocation of the Modification Order dealing with the provisions of sections 14 and 15 of the Factories Amendment Act, 1936. which, if revoked, ' would require all work done on statutory holidays to be paid for at treble rate, and on Sundays at double rate, even if done as part of a 40-hour week. These things are being talked about and, as they would provide further increases in costs, full discussion should take place before they are decided upon. Reserve Bank Finance "It is probably correct to say that New Zealand has been relatively successful in holding costs an 1 prices during the war period, but we must not overlook the fact that a degree of inflation existed here at the outbreak of war, duo largely to the expenditure of £24,000,000 by the Government on housing, financed by the Reserve Bank against Treasury bills. * "The Court, in its pronouncement, stated that since December 15, 1942. there had been an increase of 29 per cent in the wages of dairy farm workers, but it must also be said that this was for the purpose of correcting an anomaly. The new standard rate for the unskilled worker, including cost-of-living bonuses, would appear to be £5 15s 3d for 40 hours, worked mostly on the first five days of the week, and it is certain that the farm worker is not going to be satisfied with £5 a week for seven days of unlimited hours, so that further increases in the prices of farm products must be anticipated. Difficulties Foreseen "New Zealand exports nearly 50 per cent of its tfltal production of consumable goods, largely in farm products, and at today's prices; including lump sum payments, a given volume of exports is probably securing 25 per cent less imports than in 1938. and the question inevitably arises how long we could continue an economic policy out of line with export values. Present indications , are that land values must rise and that rehabilitation difficulties will be increased. "Maintenance of economic stabilisation, therefore, is of the utmost import- ■ a nee, and it can only bo achieved at a , new level if there is a courageous facing of the facts, and Government - action to make sure that the disparities i which led to the present rise do not , again develop; together with /i suspension of group pressure tactics. Judging from experiences of the past two years, this looks well nigh impossible, unless a representative economic council is set ; up. backed by strong public opinion and ■ determination to improve the relation- 1 ship between employers and employees." S