THE VICIOUS CIRCLE

Otago Daily Times, Issue 23529, 18 June 1938, Page 14

THE VICIOUS CIRCLE

A ' memorandum attached to the award of the Second Arbitration Court in the clothing trades employees’ dispute lays it down that evidence of the difficulties of employers induced by overseas competition cannot be held to justify a refusal to grant wage increases. It is pointed out in the memorandum that the court, over which Mr Justice Hunter presides, heard evidence to show that the industry was encountering difficulties due to overseas competition. The decision of the majority of the court, however, was that it would not be justified in withholding wage increases, this decision being based on the conclusion that competition from other countries which was assisted by the payment of lower wages than those current in New Zealand was a matter for the Legislature rather than for the court to deal with. The view which is thus expressed, and to which effect is given in the award, does not seem to accord with the practice that has been adopted by the First Arbitration Court. A lack of uniformity in the practice of two courts, adjudicating upon disputes of a similar character, was one of the dangers of which persons engaged in industry were apprehensive when the Second Court was established, but there was no specific evidence of its occurrence prior to the issue of this particular award*. Yet the Second Court may argue, as it does, not without some degree of plausibility, that its responsibility ‘ is simply to determine the equity of the grounds on which requests for higher wages are made. Certain principles relating to wage standards and hours of work have been written into industrial law by the Government, and those, on application, have had the effect of raising costs to the increasing embarrassment of industry itself. It is logical to contend that the Legislature, having, by its acts, raised living costs and thus created the necessity for increased wages, must accept the responsibility for protecting industry against the consequences of its policy. That may be said to be the argument by which the majority in the Second Court was influenced. If the court had refused the clothing trades employees the wage increases sought by them, and if the effect of such refusal had been to place operatives in that industry in a position inferior to operatives in other industries, it would have given the clothing trades employees cause for complaint. The Government has undertaken to protect industry

against the very dangers cited by the employers in' the case under review. It has the instrument of the tariff for use to that end,, but it is to be observed that the Prime Minister said not very long ago that only to meet the most urgent representations would the tariff be amended during the coming session of Parliament. On thd" assumption, however, that the tariff 1 is employed as a protective weapon against outside competition, the inevitable consequence will be ah increase in the price of certain classes of goods, and a fresh argument for still higher wages in other ' industries may be based on the shrinkage of purchasing power thus caused. In short, the memorandum of the court provides one moreillustration of the existence of the vicious circle of costs, wages and prices, each chasing the others in an upward spiral.