THE OTAGO DAILY TIMES Monday, March 19, 1945. AN END TO STABILISATION?

Otago Daily Times, Issue 25797, 19 March 1945, Page 4

THE OTAGO DAILY TIMES Monday, March 19, 1945. AN END TO STABILISATION?

With the irresistible force and the gathering momentum of an avalanche, wage increases are now bearing down upon the luckless, never very secure, structure of stabilisation in New Zealand. The Court of Arbitration’s pronouncement increasing the standard rates of pay for labour can surprise nobody, though it must trouble gravely those who have the economist's rather than the sentimentalist’s understanding of the effect of higher wages—and higher costs —upon the economic well-being of the nation. The Court’s decision is entirely logical, as are the conclusions upon which it is based, excepting only the unconvincing and unconvinced declaration that the increases will not have any serious inflationary effect. And even this statement might be justified in the Court’s purview, since it is at the moment considering only one section of the wage-earners of New Zealand. It can certainly be safely asserted of the rise in the standard hourly wages, as it was disingenuously stated by the Railways Industrial Tribunal a month ago, when it issued its award improving the salaries and wages of the State railway service, that “ the increases authorised will not impair the economic stability of New Zealand.” The question that remains to be answered is at what stage a general increase in employee earnings, extending to every avenue of occupation in the country, will create such a maladjustment of the economic balance in the Dominion that not only will the national economy be affected deleteriously, but the employee classes will themselves find that their bread has turned to a stone in their eager hands. And the answer, beyond further shadow of doubt, is that the increases now authorised will be followed by more increases, spread over the whole wage-earning community, until the' inexorable spiral of earnings-costs-prices will reduce the value of money as spending power below that which it now possesses. As that rule comes into operation the Parliament of New Zealand will be able to congratulate itself that it started the vicious process in its own interests. The first important sabotaging of the Economic Stabilisation Emergency Regulations, 1942, occurred when Parliament, fortified by the report of a Parliamentary Select Committee, conferred upon itself a handsome monetary increment, part of it tax free. That was in December of last year, when already members of the Government had made halfpromises to certain branches of the State service that their demands for wage revision would receive attention. In February the Prime Minister cannily cleared the way for the inflationary juggernaut, when the Stabilisation Regulations were amended to allow the Court of Arbitration power to vary the monetary provisions of awards. The Railways Industrial Tribunal’s decisions were announced thereafter, to be followed by Mr Fraser’s'assurance, “ taking into account the Railways Tribunal’s announcement,” that the pay of all public servants, including teachers, would be sympathetically adjusted. Army rates of pay were next increased. Each and every one of these increases could be justified in greater or less degree. And the Court of Arbitration, when it came to consider the application upon which it has now acted, already found the position, as it records, as being that some 127,000 —23 per cent.—of the salary ” and wage earners in New Zealand were to receive benefit from wage increments over which it had no jurisdiction. It found, in fact, that half the props under the stabilisation structure had been knocked out, with the result that it could no longer, if it wished, maintain the stability of that edifice by leaving the remaining ones intact. In order 4o restore a balance as between various sections of employees, who have all to buy their commodities on the same market, and one inevitably sensitive to rising costs, the Court of Arbitration has raised standard wages. Its decision is accompanied by an intimation—which is also an invitation—to award workers, who can now apply for wage reviews to meet the changed position. It is the end of stabilisation. That it is also the beginning of inflation cannot be said, for the inflationary tendency, concealed to some effect by the Government’s producer subsidies —which must also be increased to maintain some illusion of a regulated cost of living scale—has long been evident even to the most easygoing guardian of the family budget. The Government in New Zealand, which with high hopes and high purpose in 1942 moved' to put the economy of this country upon a steady, war-time basis has, under pressure from those whose wishes it is powerless to resist, cancelled its endeavours. But it can have no confidence now that those who believe they are benefiting from its weakness will not before long be reproaching it for a cruel deception.