THE ARBITRATION ACT

Otago Daily Times, Issue 14245, 20 June 1908, Page 14

THE ARBITRATION ACT

■» -— ITS RELATION TO INCREASED PRICES. , <&TE ON THE QeSSTION. Tho Hon. D? S&sdlay, in speech ct Wellington so Wednesday slight last, aepliod at some teigtli to critiewms of his recent speech a), Wanganui, in which ho argued that the eporation of th) Arbitration Act had bail no apprceiabhj effect ssgon tho prices ruling in Now Zealand for tiU necessaries of life. Be said: — 5n my Wanganui vfxxch I tried to fliiabliah tho following propositions:—(l) •£kat tho English wf*ge system was originally non-competttive, and that until about ,tho beginning of Jast century wages were determined and regulated cither by law, custom, or tho cratt aud merchant giulds; (2) that' such regulation gavo place under machine industry and the doctrines of natural liberty to a system of competitive wages; (3) that this system produced the socalled "iron law of wagc3," a bare subsistence or ■ sweating wage, and with it produced evils' so widespread and revolting as to set agencies at work to check its operation and limit this "iron law," these agoncioa boing philanthropy, publio opinion, trades unionism, and, finally, legislation; (4) that this broad movement, beginning with wage regulation, is passing through the stage of free competition, and in New Zealand at least is setting lack to wage regulation again, thus illustrating in part Sir Henry Maine's priuciple of progress from status to contract, and in part a reversion upon contract back_ again to. status; (5) that tho most effective check upon the iron law of wago3 yet dovised was tho legislation which vvo call our compulsory industrial arbitration,, and that it was this act which arrested and exterminated the sweating proved to exist in New Zealand before tho act came into force. Much of all this is admitted :by my critics, bin some of them say that sweating in this country was not eradicated by tho Arbitration Act, but by the Factories Act, passed before it or shortly after it. In reply, I appeal first to tho Arbitration Act itself, which opened a court, to every seven industrial workers to secure ior them a living wogo in their calling. Second, I appeal to tho facts. At Wanganui I quoted figures taken from official reports and awards to establish the following facts:—ln 1890 tailoresees got 15s a week; hoisory workers, 9s a week; shirtXuakers, 18s 6d a week. These wore the maximum wages paid, and 1 quoted these and other trades to show that sweating rates existed in 1890." I also showed that under awards of the Arbitration Court .those rates' had. ken nearly doubled, and were 253, 20s, and 30s respectively. Now, the simple question is, were these marked advances from a sweating wage to a fair wage effected by tho Factories Act? Plainly not, as the following facts prove: If -vou will refer lo "The Factories Act, 1894," and the earlier Factories Act of New Zoaalnd, you will find that they contain no provision whatever for a minimum wage. Henco an' employer could, until the awards of tho Arbitration Act came into fores, pay a factory operative no wage at all, or as low a wage as tho operative would agree to take. It. was not until 1889, when "The Employment of Boys and Girls Without Payment Prevention Act, 1899," was passed—that is, five years after tho Arbitration AcT becaino law—that any minimum wage was fixed for factory operatives in New Zealand. And wliat was fhatN minimum wage? Hero was tho only statutory provision until 1902. Section 2 of tho act of 1899 provides that "every boy and girl under'lß years of ago is to bo paid in no case less than 4a per week for girls and 5s per week for boys, irrespective of overtime." Until 1902 this wastho only factory act provision for a minimum wage. Towards the end of 1901 a new factory act came into operation, and section 31 provided that for boys and girls under 18 the rate of wage was to be not less than 5s per week, and thereafter an annual increase of not less than 3s weekly until 20 years of age. But on tho passing of "The Arbitration Act, 1904," as I have said, any seven workers in any factory could form a union, bring a dispute as to wage 3 before' the court, and have a living minimum wage fixed. Thus by recommendations, agreements, or awards under tho Arbitration Act, the wages of shop toiloTcsscs and factory tailoresses and pressers were, fixed at a living rate long beforethe Factories Act of 1901 came into force (see Parliamentary Return H., 11 D., showing awards, etc., under the Arbitration Act from its inception.) Tlio same return also shows that in scores of trades and factories the laininrum wage was fixed by awards of tho court and not by any factories act—' before, indeed, any factory act provisions for minimum wages existed. In view of all these references can it he seriously contended that sweating in this country was exterminated by the Factories Actand not by, and through, the agency, actual and potential, of the Arbitration Act? But I further contended that iho act was designed in part to prevent sweatbig and NOT TO PREVENT STRIKES ALOiv I quoted from perhaps tho best authority I could got, tho trainer of the act himself, to support my contention. I need not do inoro now than give a further and, I think, conclusive proof. In giving a full account of tho origin and purpose of our Arbitration Act, of which Mr Reeves 'was tho framer, ho says, on page 70 of his work on 'State Experiments in Australia and New. Zealand': "Those (tho critics of the act) write of it as if its solo function was to deal with militant, highly-organised bodies of combatauts-i.e., with strikers or those able to strike. Far from being confined to this, much of its (the Arbitration's Act) best and most humane work is done in improving the condition of sweated workers, too poor and 100 weak to give ' battle.in the ordinary fashion of industrial warfare (i.e., by .strikes). It is the best hopo of the woman worker, for whom trades unionism has done so little" I repeat, then, that ithe act has served, and was intended to serve, the double purpose of sweating and strike prevention—purposes very far indeed from being identical. I contended that the act bad for many years prevented strikes, and' that if reasonably used in the spirit intended by its former framer it would always prevent them. This contention has been adversely criticised. 1 am not going to repeat the proofs I gave, but submit these considerations to unbiased critics:—(a) There were in 19G6 290,000 wage-earners of all kinds in New Zealand, and the average number throughout the whole career of tho act would lie over 250,000. I (b) Up to the present time—that is, over 13 years—lß strikes have taken place, all really small and 6hort-livc-d, and only 12 of these have been illegal, since in six the act had no application. In these six there was no union award or binding agreement. In these illegal strikes 740 all told engaged—that is, less than onethird per cent, of the above average of total wage-earners, and if those engaged in strikes, legal and illegal, lie included, not one-half per cent, of these 250,000 | workers. (c) Tho days of idleness of ! workers due' to these strikes wore very fow. In some cases the strikes lasted only a day or two. (d) Now, compare these figures with our Motherland's experience. From 1891 to 1900—tliat is, in 10 yearsthere wcro 7931 labour conflicts in Great Britain, involving directly 2,732,169 workers. It is estimated that the total ,wage-earners of Groat Britain of all classes was, in 1906, 14,6'10,000. and during the decade in question would be about 12,700,000. Thus, during this decade over 20 per cent, of the British workers was at come time or other directly involved in a labour conflict, as compared with less than £ per cent, in New Zealand during 13 years, (e) The total number of days British workmen wore idle owing to strikes (i.e., multiplying the days idle by the number of men idle) was 100.191.528, making an average idleness of alxnit 39 days per man. In Now Zealand I have no definite figures of (lie, time of idleness; but it lias 2>ot been moro than a fow days per man. Vo wonder English reviewers of our 'Wporicnce tell us i&j.t •■ S UR STRIKE <UM BEEM BUT SHORT-WiiD TIFFS cm compared with the long ami desperate. industrial struggles of Great Britain, where compulsory arbitration has not yet Arrived. But surely most of us in conftctflon with the work of our Arbitration oW.ri fall into a very common error—that C? measuring tho importance of incidents a.i tfoU as of individuals bv the extent of their noisy obtrusion upon public notice— treating them as typical (which they arc not) rather than, as freaks (which they are not). It is a sample of this error which seems to induce some people, even editors (if one may include them without profanity), fo treat the act as a disabled and useless machine because a few short-lived strikes havo taken place and a few- wry noisy gentlemen, kayo doclared thsv. nil l

havo nono of it. But let us be just bofore wo aro consorious. Follow the career of the court and the act since their inception —follow the court's work to-tlay with a fair miad and you will admit that it htw done, and is doing, splendid work, discharging ono of tho most difficult tasks with fairness, ability, and patience. I claim that tho act ban done immense service in this country in the cause both of industrial peace and fair wages. That, it is capable of improvement tee, I do hope to show) should not belittle that service. I contended that the act had not appreciably increased the worker's cost of living. This view has been considerably canvassed. It is very important to decide whether the operation of the act is merely to increase tho nominal wage, leaving the real wage stationary-or, in other words, to take away tho benefits it confers as higher wages_ by causing a corresponding increase of prices. If this is truly its operation, I admit that tho act, as it stands, is of no value to tie workers as an instrument for getting for thorn a hotter real wage. Hence it is essential to decide this question. Now, first let me emphasise an important point. My proposition was that tho act had not caused an increase of tire cost of living of the workers—that is,, of the wage-earning class which it was passed to protect, or deal with. ./I am not concerned just now with the effect the act has had upon the cost of living of the, wealthier classes. It is quite demonstrable, r think, that it may—and probably docsaffect tho cost of Jiving of" the wealthior sections of tJio communitv while it does •not appreciably affect tho 'cost of livin-- of tho worker. -.This may be recognise'd if wo remember that a man with a wifo and family on 50s a week must spend it almost wholly on the necessaries of life, while a man with £50 per week spends only a very small proportion of his income upon necessaries. And if necessaries escape Hie influence of the wage . increases of the Arbitration Court a.nd other commodities do not, my distinction would be largely established- " Now lot me point out that economists Jiavo never established any law of casual connection between increases and decreases in wages and the workers' cost of living J hero is an immense amount of economic writing on this topic, bat I will cite onlv one authority. An inquiry was made by the British Board of Trado into work-in-class Tents, housing, and retail prices together with tho standard rates of' wages prevailing in towns of the United King(lorn. I heir report is published in the journal of lh o Royal Statistical Society for March, 1908, and it will lie soon that the report admits, after the fullest investigation, that "no general law of connection has been established between variations in wages and tho cost of living." Of course I do not deny that, if wages are increased all round, this MUST HAVE AN EFFECT ON PRICES, but. it, by ho means follows that all prices will rise. Now, at Wanganui I quoted a report from tho Registrar-general which ■showed that in 12 years since the act passed tho cost of the workers' living, hosed upon the chief articles of diet, had increased 18.6 per cent., while the genorat increase in wages elfected by the act during the said period, was 17.9. This report did not include rent or clothing, and it is admitted that, if thsse items had been included, the increase in the cost of living would have been greater. Probably the increase has not been less throughout N«vr Zealand than 20 per cent. How much of tins .increase is duo to\the act? Now you cannot answer this question offhand. A reliable answer can be obtained only by examining the items of expenditure which, make up a worker's cost of living and ascertaining how miioli, if any, the Arbitration Act has alfeetcd the prices of these items. i*t us take a worker on 50s per week. Hove is a statement regarding ,thc weekly cost of living computed from actual expenditure for a family of father and mother, with three children, whose ages were three, five, and seven years respectively, liv.m,j in a four-roomed house in Christchurch. This statement was given before the Arbitration Court about six months ago by a worker's wife, whose budget seems very carefully compiled:—Groceries (including kerosene, butter, and egga) 8s 4d. bread 2s 6d, meat ss, fish Is, coal and firowcod 2s Bd, milk 2s 3d, vegetables andjru.it '4s 6d, newspaper 6tl, rent Us, lodge and other society 2s, clothes and boots 10s;—total, £2 9s 9d. Probably other wives would vary these items a little, but with 50s to keen two adults and three children' there is little, if anything, for any luxuries, and food, rent, and clothing must cost the family about five-sixths of the worker's wages. The lower the wage, as I have said, the greater proportion of it must be spent on the necessaries of life. Now, let us look through these items, and ask how much the price of them lias been increased owing to the Arbitration Act. Begin with food. It may _ bo said to consist of variously— beef, milk, flour, potatoes, sugar, mutton, bread, oatmeal, eggs, pork, butter, rice, and tea. The Registrar-general found that, taking all these necessaries, there was a rise in 12 years of 18.6 per cent.. What has caused this rise? There has been, as there always are with respect to tho price of necessaries, several causes. Wheat, oats, milk, potatoes, mcao-iromomber how seasons good and bad, droughts, shortages due to market fluctuations and other causes affect these conditions—remember, also, that the wages of farm labour havo not and do not vary grcat.lv from decade to decade, and one must surely admit that to unhesitatingly conclude that the increased prioo of these commodities is duo to wages •having been raised by the Arbitration Court is somewhat unreasonable. But there is a further consideration, and that is THE PRICES OUR EXPORTS OF FOODSTUFFS havo been obtaining in Britain and foreign markots. These prices aro plainly not affected by our east of production—by the wages we aro paying here, but by tho competition and by supply and demand in the world's markets. If tho wages in Now Zealand had been doubled wo should have got no more for the foodstuffs we exported, and if these wages had 'been reduced 50 per cent, we should have got no less, and prices hero would have been about ihe same. The foreign markets for our foodstuffs practically control on the average the local prices. The price one pays for the best butter in New Zealand is, in the long run, determined by wbat its prevailing price is in London. Producers arc not likely to take less here if they can get more in Great Britain. Now, I am goii'j; through all ,tho above items to prove it. The Registrar-general has furnished mo with a mass of figures in support of the view I am advancing, but they are Iro long for statement here. I assert that there is not a single item in the above list whereon-any material increase in prke is paid by the workers simply on account of an increase of wages under the Arbitration Act. Next, with repaid to the second important item—rent. I repeat "my contention at Wanganui that the increase •• rent is mainly due to increase in unimproved value of city lands. The statement above given fixes rent at lis per week, but that is in Christchurch. where renis are lower than in Wellington. I instanced Wellington, and said that the unimproved value of the lands within the city boundaries had increased about 300 per %nr. Apply this to a piece of land necessary for a worker's home. Suppose it cost. £H0 in 1890; it would widh this increase cost £240 in 1997. I find that about £240 is about tho average price of the land upon which a four, or live-roomed cottage can be built in Wellington now. Rent must lie jiaid on this increase, and converted at 5 pc l . cent, it is equal to over 3s per week. But it is. said the cost of building lias increased. Now. it will be found that the Arbitration Act has increased carpenters' wages very little—loss. periiaps, than those in meat other trades. Compare the award rates with regard to builders' and general labourers with the rates prevailing when the act came into force, and I eouftdentiy a;sert that the increase, in rent, of a worker's cottage due to increases in wages paid to all those employed in building it is not 4d per week. It is true building materials are dearer, but investigate'the rauf.es and :'i will 1» found that they are many—e.g.. greater demands, more combination, and les3 cutting competition among the suppliers _ of timber and other building material suppliers, increased cost, of obtauimg timber owing to the foiests becoming more and more remote, increased royalties asked TUy forest owners, and, to a small extent, ivhS-essed wages. But express in the form of increased rent of a worker's homo the increased cost of it due to these increased wages of every class and you tyin find that such increased rent is measured |;y a few pence. Next, with regard to the clothing a working mar. and his farr-ilv require. Messrs J. Smith and Sons tnd Messrs Veitch and Allen, of this citr, to'-'n firms being liighly qualified to jive m opinion, have vory ktndlv furnished m* with a carefully-prepared statement of items and prices of all the clothing and boots required for a worker on. say, 50s per week, his wife, and three or four children. These statements arc here and are availoible for publication. Messrs Smith and. Son fix Ihe tola] cost of clothing, without. Ixwts, at £17 17s 2d per annum, and think #>•«. ilu. difference in price (al'cwins; for

value) between 1694 and 1906 is about £4. Messrs Veilch and Allan show thai bonis ami slippers cost no more now tha.ii in 1894, .since improved machinery has counterbalanced anv advance in iho price of material and labour. As regards tho animal cost of clothing of a worker and bis family, Messrs Veilch and Allan, giving /nil details, fix it at £22 17s 8d now. as againsl £18 16« 7d in 1834 How much of the differences of price between 1894 a I'd 1808 is due fo increased wages and how much to other causes has not been, and probably could not be stated. But both firms agree in fixing the whole increase .it something over £4 per annum e.pjal :o about 3 per cent, of the workers' wages--a little over 6d in the. pound even if the whole' wcro due lo increased wages. 1 have thus dealt, with the principal items of outlay by a worker. If you will peruse the list of other items you will see that they have been PRACTICALLY UNAFFECTED IN PRICK, by (lie Act. My condusion\ therefore, is that while the workers' cost of living has increased probably 20 per cent, since the act came into force, this has been only in very small part due to the operations of the Arbitration Act, or, in other words, is not appreciably due to the allround increase in wages, 17.9 per cent., which the court has given in all the trades it has dealt with.

Hut I also said at Wanganui that employers luul transferred to the community in the shape of increased prices the extra wages the court had awarded, and I have been told that my two conclusions are inconsistent, and that if the extra wages have been so transferred in Iho shape of prices to the consumers the particular consumers affected must pay for the all-round 17.9 per cent, increase in wages given by the court. I admit this, but it does not contradict my proposition that the increase has not materially affected the workers' cost of living, for (1) the workers benefited by the act are but a class, and the burden of their increased wages uoes not return in the shape of prices upon themselves -alone, but is distributed over the whole body of the consumers., of whom they may be but a email section, small in proportionate numbers, and smaller still in the extent of their consumption—e.ff., in the case of luxuries. (2) Of the 80 trades referred to in the parliamentary return above quoted the great majority arc not engaged in any way in supplying any of the articles upon which a worker's wage is almost invariably spent, and hence the price of these articles cannot be appreciably affected, even indirectly, by increases of wages in the majority of these trades. (3) The prices of food-stuffs in New Zealand have not varied appreciably owing to any Arbitration Court increase of wages, and consequently their increased prices are not due to any transfer of such increased wages lo consumers. I repeat, therefore, my statement at Wanganui that, even if no increase in wages had taken place in New Zealand during' the last 14 years, the workers' cost of living would still have greatly increased owing to the high prices for our foodstuffs in foreign markets, and the groat increase in the unimproved value of land and the cost of building material. I maintain, therefore, that the Arbitration Court has not, by an alleged increasing of the cost of living, destroyed tho bohefit of the (ill-round increase .in its rates of wages. CRITICISM OF THE ACT. I tried to show in my former address that the act aimed at two purposes: (1) Tho fixing of a minimum living wage— an anti-sweating wage—and (2) at strike prevention. It was not the intention of the man who framed, or of tho Parliament which passed, the act that it should be a standard wage regulator. It was anticipated that although a minimum wage was fixed by an award, the old contractual basis of service should continue, and that the court would be rarely invoked, and only to settle sumo outstanding point of difference which stood in the way of the parties coming to an agreement. I showed that, from the use made of the act, and for the reasons I gave, the court has steadily become a State regulator of fair wages in each industry. A wage, though fixed, as the least an employer was allowed to pay, was assumed by the unions before the court, and in general practice was, the highest the employer would pay. The result of this has been a marked tendency to a uniform, or (lead lovel wage in each trade, for all workers, good, bad, and indifferent. It has tended to deprive superior care, skill, and industry of tho reward and encouragement essential to their exorcise, and tho dead level of tho wage tends to impress itself upon the energy of the worker. This is the evil tho Prime Minister referred to in his speech at Onohunga when he declared that what the act wanted was some provision, some machinery, by means of which, while preserving to tho workers all the present benefits of the measure, a proper reward should be provided as an incentive to superior care, skill, and industrv.

The second point of criticism I offer relates to the conciliation boards. It would be idle to deny that, for reasons it is unnecessary to discuss just now, they have entirely failed to achieve the results Mr Reeves anticipated. Ho thought that, through tho agency of the boards, 90 per cent, of our industrial disputes would be settled—the assumption being that the intervention of impartial conciliation would enable the two parties to come to terms upon tlie points finally in dispute between them. When the parties gave up trying to settle these disputes—gave up, ipdeed, having a-ny genuine disputes,—but .worked the act for tho sole purpose of wage and laboui'! regulation, conciliation really had no place, and the. boards, as they now stand, have beeomo. a kind of fifth wheel in tho coach, of which they were intended to lie the most important part—an agent wrested from its true purpose of conciliation inio ono of expense, friction, and delay. Thus, in tho bill of last year tliey were to be abolished, and a new system of industrial councils established.

The third point, of criticism is (hat. as it at present stands tho act makes no satisfactory provision for the enforcement 1 of fines. It is true that the Court of Appeal lias decided that, by a process of attachment, strikers may fro imprisoned for non-payment of fines imposed on them, but this remedy is not provided by the act, and springe from an old principle of our law. Even this" method of enforcing imprisonment is. exceedingly clumsy and circuitous, but for reasons already given I am opposed to imprisonment for faking part in a strike. In. tl>o absence of imprisonment, and as the act stands, it eontains no effe-c-tive method of enforcing fines, as experience lias already shown, and some amendment in the direction of an effective method is required,

Again the provision of the act with regard to what is called victimising, although so far it has not permitted any misoarriago of justice, seems to me to require some amendment! Section 100 of the act oi 1905 runs; "Every employer who dismisses from lik employment any worker •by reason MiItKLY of the fact that tho worker is a member of an industrial union, or who is zonclusively proved to have .■dismissed such worker merely, because he is entitled to tho benefit of an award, order or agreement, shall bo deemed to have committed a breach of the award, order, or agreement, and shall bo liable accordingly." It will be observed that the word " merely " strictly limits tjje application of Uie section to cases where tho whole and sole reason for dismissal was that slated. Hence, in cases where the employer's dominant motive for dismissal was the worker's proper use of the act. or an award, the employer would incur no penalty if he showed thai, in addition to his dominant motive, ho had some minor reasons. 'litis should not be permitted. The court should ;hc empowered to decide wJiat the domiw:,'; motive was, and fine accordingly.

Lastly, 'the act has in practice, and owing to no fault of the court, been unable to secure that expedition of its operation which, in heated differences between employers afid employees, is s;> desirable. Expedition is here only secondary in importance to the competence and impartiality of tho tribunal, and to any amendment of the aot this fact must be applied as a cardinal test.

LABOUR COUNCIL'S VIEWS. (Fnois Orm Own Coiinr-spoNttEHT.) i WELLINGTON, June 19. Dr Findky's proposals regarding extra, wages for increasod effort do not meet with the approval of organised labour here. Tho genoral opiuion secins to be that the competition amongst workers is keen enough as it is, and that it is not wise to set men at each others' throats for the sake of a few extra shillings per week. The "cutting-in" by employers could not bo averted, and in the opinion of tho Trades and Labour Council any system of classification or speeding up is'against the wellbeing of the workers.