STANDARD WAGES

Otago Daily Times, Issue 25797, 19 March 1945, Page 6

STANDARD WAGES

REASONS FOR INCREASE PRESENT RATES OUT OF BALANCE LITTLE RISK OF INFLATION In giving its decision increasing the standard rates of wages by 3Jd an hour the Court of Arbitration finds that the rates fixed in 1937 are completely out of balance with the minimum rates now payable to at least 30 per cent, of the workers of the country, and a revision has become necessary. As to the effect of any increase on the economic position of the Dominion, tne court expresses the view that an adjustment can now be made without any serious inflationary effect. The text of the pronouncement is as follows: — On February 13, 1945, important amendments were made by Order in Council to the Economic Stabilisation Emergency Regulations, 1942. (Serial Number 19456, Amendment No. 5.) The regulations with which the court is at present concerned are 38 (as amended), 39A (1) and (2) and 398. They read as follows: — “38. (1) In exercising its powers and functions in relation to the making or amendment of awards, or apprenticeship orders, the Court of Arbitration shall have regard to the general purpose of these regulations, and also to the desirability of so fixing rates of remuneration as to restore or preserve a proper relationship with the rates of remuneration of other workers or classes of workers (whether fixed by any award, apprenticeship order, or industrial agreement or otherwise)), but, except as provided in Regulations 42 and 43 hereof and in sub-clause (2) of this regulation, the court shall not have regard to any fluctuations In the cost of living.” " 39A (1) Upon application made by any party to any award or industrial agreement that is in force on the commencement of this regulation, the court may amend the provisions of the award or industrial agreement relating to rates of remuneration in such manner as the court thinks fit for the purpose of restoring or preserving a proper relationship with the rates of remuneration of other workers or classes of workers (whether fixed bv any award, apprenticeship order, or industrial agreement or otherwise). (2) In making any such amendment the court may, if in its discretion it thinks fit, direct that the amendment shall have effect as from such date before the date on which it is made as the court thinks i r M „

398. The court may from time to time, of its own motion or on application made in that behalf, make a pronouncement specifying standard rates of wages for skilled, semi-skilled, dnd unskilled workers for the purpose of these regulations. On February 14, 1945, the court publicly announced that it proposed to exercise a. an early date the power vested in it by Regulation 398. The court also expressed a desire to hear representatives of Dominion organisations of employers and workers on the general question of standard rates of wages for 'skilled, semiskilled, and unskilled workers. The representatives were heard on March 5, 7 and 9.

Previous General Order

The last standard wages pronouncement made by the court was Issued on September 7, 1937 (37 Book of Awards 1648). The rates for the several classes of workers were fixed as follows Skilled workers. 2s 9d per hour; semi-skilled workers, 2s 5d to 2s 7Jd per hour; unskilled workers. 2s 4d per hour. It was stated that these rates were intended as general standard minima for casual labour, and were not necessarily applicable where employment is regular throughout the year. The representatives of the workers’ organisations at the hearing just concluded submitted that the rates prescribed in 1937 should be each increased by 4Jd per hour, that is, the new rates should be as follows: —Skille--’ workers, 3s lid per hour; semi-skilled w kers, 2s 9id to 3s per hour; unskilled workers, 2s BJd per hour. It was made clear that the above rates should be subject to the court’s general orders of August 9, 1940, and March 31, 1942. The same representatives also expressed the opinion that the court should on this occasion make a pronouncement fixing standard hourly and weekly wage rates for female workers in skilled, semiskilled, and unskilled occupations. They submitted that such rates could fairly and reasonably be assessed at 66 2-3 per cent, of the corresponding rates for adult males under the respective awards. The workers’ representatives asked further that the court should lay down standard hourly and weekly wage rates for junior males employed in factories on unskilled and semi-skilled work. Restoration of Balance It is perhaps appropriate to point out that the basis of the pronouncement now under consideration differs in important respects from the basis underlying previous pronouncements of this court. The principal factors which the court was required to consider on previous occasions were the' general financial and economic conditions affecting trade and industry, and fluctuations in the cost of living. The present pronouncement is being made pursuant to the powers contained in Regulation 398, and it is expressly indicated that such powers are exercisable for the purposes of the Economic Stabilisation Emergency Regulations.

It is clear from Regulation 38 that In specifying standard rates for the purpose of the regulations the court shall not have regard to any fluctuations in the cost of living.

The matters to which the court Is required to have regard are the general purpose of the regulations and the desirability of so fixing rates of remuneration as to restore or preserve a proper relationship with the rates of remuneration of other workers or classes of workers, whether fixed by any award, industrial agreement, or otherwise.

The general purpose of the regulations is to promote the economic stability of New Zealand. (See Regulation 2.)

We propose in the first place to examine the position with a view to ascertaining whether the present standard wage rates bear a proper relationship to the rates of wages now being paid to various classes of workers in the Dominion. It is to be understood that all rates discussed subsequently in this memorandum, except where stated otherwise, are subject either to the court's general orders of August 9, 1940, and March 31, 1942, or to cost of living allowances of a similar nature.

Since the Economic Stabilisation Emergency Regulations came into operation on December 15, 1942, the rates of wages determined by the Court of Arbitration have not been varied to any great extent, and where increases have been granted they have been relatively moderate. In the’ last few months, however, there has been a noticeable tendency for employers t 6 agree to increased rates in Conciliation Councils or in negotiations for special agreements.

The relative position of certain limited groups of workers lias been appreciably improved in the past two years, possibly in some cases as a result of the adoption of militant tactics.

Nevertheless the position, since stabilisation, of the great bulk of the workers whose wage rates are governed by the minima prescribed In awards can be gauged by an examination of the index numbers for weekly money wage rates (adult male workers) prepared by the Government Statistician. The index number at December 31, 1942, sixteen days after the introduction of stabilisat'on, was 1254. The index number at December 31, 1944 (the latest figure available), was 1270. The increase over a period of exactly two years amounts to 1.28 per cent. The regulations indicate that the court Is considering whether adjustments to wage rates are necessary, may take into account the wages of workers or classes of workers whose rates of remuneration are fixed otherwise than by award or Industrial agreement. Increases to Large Groups

During the last few weeks decisions have been made, the effect of which is to increase the rates of remuneration of several large groups of salary and wage earners principally in the service of the State. Tire total number ot salary and wage earners in the Dominion, including members of the armed forces who are for the time being domiciled in New Zealand, is possibly in the vicinity of 550,000. Of this number we estimate that approximately 127,000, or 23, per cent., are to benefit from decisions already announced. The extent of the increases granted in salary or wage rates range in general from £lB per annum to £75 per annum Workers on hourly or weekly rates have broadly been granted an increase of 3Jd per hour, equivalent to approximately £3O per ‘annum. Many thousands of workers of this class are employed in certain Government departments such as the Railways, Post and Telegraph, Works, State Forest, Native, Lands and Survey, Internal Marketing, and Navy Departments.

Agricultural workers are another group of workers whose rates of remuneration are fixed otherwise than by awards or industrial agreements. Since the introduction of stabilisation, the gross rate of remuneration (inclusive of board and lodging) of adult male workers on dairy farms has risen from £3 17s 6d per week to £5 per week, an increase of 29 per cent. The base rate for male workers in orchards has been increased in the same

period from £4 4s per week to £4 15s per week, a matter of 13 per cent., while the hourly rate for adult males in the field section of the tobacco industry has gone up from 2s to 2s 3d, an increase of 121 per cent. The rates quoted for agricultural workers are not subject to the court's general orders. During the hearing of this case references were made by both sides to recent wage increases to coal miners. Many coal mine workers are on piecework rates, and in 1942 those rates were increased by 5 per cent. At the same time in 1942 adult day wage workers received an increase of from 2s lOd to 3s per dav. As an example, the rate for firstclass shiftmen underground rose from 22s 5d to 25s sd, an increase of approximately 13. per cent. Since stabilisation the same shiftmen have received an increase in remuneration of 2s 2d per day in the form of a special bonus, equivalent to a further rise of 8| per cent. The bonus in the case of surface workers amounts to Is 6d per day. The above increases are gross; in other words, the court’s general orders are not superimposed thereon. Another group of workers whose relative position appears to have since the introduction of stabilisation is the industrial group engaged in the provision of transport by water. According to the Abstract of Statistics, the index number for weekly money wage rales ; tor this group at December 31, 1942, was laSb. The same index number at December 31, 1944, was 1680, an increase of oust under 8 per cent. It is manifest from the above Information that the standard rates of wages fixed in 1937 are completely out of balance with the minimum rates now payable to at Jeast 30 per cent, of the workers in the country. It is necessary and, indeed, only just that the standard rates should be

revised. SSSCSvI the economic stability of tne e x number The combined - stood of export prices for Decemoe^rw at 1817, compared with 1440 f for ended December 31. the index nSJr"inc« the c‘e“ a ass sss. ing increase in the case ox uua tories is hkely to be 18 p er funds n, A^ D “z? B ‘Sd tankinfinstitution, (on of New Zealand business) stood at'over £53000,00% a record high figure, and an increase on the figures f cember 28, 1942 and December 37. 1«B. of 311 per cent, and 241 pel cenx. SP The V ra y t'e of increase in active banknote circulation which has been _so noticeable since the war commenced , nas steadied up appreciably in the last m The S ‘all-groups index numbers for qhare prices appear to indicate that busiu healthy The index number for ml is 1279 compared with 1010 for 1942, an increase of over 26 per cent. It is probable that part of this increase niay be due to the borrowing of large sifms of money by the State at, relatively low rates of interest.

« No Serious Inflation ” The possibility of inflation is a, matter which requires at all times to be carefully watched. There appear, however to be some indications of a decline in inflationary tendencies. In the dar vear there has been a deflation of ban/ credit, a development, however, which might be only temporary. The total volume of consumer .goods and services available for the civilian population shows signs of an increase. There has been a little relaxation in regard to exports from other countries to New Zealand. A greater percentage of some classes of locally manufactured goods is being allocated to the local market. Surplus war stores, buildings, etc are being disposed of to the public. A falling off in the amount’of overtime worked must result in a reduction of SP Sf“UmT'o, money In circulation made up of coin, bank notes held by the public, and bank demand deposits shows an increase as at December, 1944, of only 1 h per cent., compared with the figure y for December, 1943, whereas the latter figure showed an increase 0f22 2 per cent, over the corresponding figure for December, 1942. On the whole, it would a PP e * r the standard wage rates of 1937 can now he adjusted within reasonable limits without undue embarrassment to industry or without any serious inflationary effect. On the other hand, having regard to the preferential position in which a very large number of workers have been placed as a result of recent decisions, we are of tile opinion that if adjustments are not made, there are bound to be serious but understandable repercussions throughout industry which would undoubtedly react unfavourably on the economic stability of the Dominion. It is perhaps not out of place to mention that the easing of restrictions on wage adjustments imposed by stabilisation policies is very noticeable in other counThat Is not to say, however, that the dangers of inflation are past. Indeed, with the improvement in the war situation there is need for greater vigilance than before. The workers ox New Zealand have saved many millions during the period of the war, represented by national savings accounts, national savings bonds, and accounts in the Post Office Savings Bank. A degree of inflation would inevitably react unfavourably on those funds by reducing their purchasing power. The lessons of the years which followed the 1914-18 war should not be forgotten. New Rates Fixed In the result, the court has decided that the standard minimum rates of wages for adult male workers will in future be as follows:—Skilled workers, 3s OJd per hour; semi-skilled workers, 2s Bid to 2s lid per hour; unskilled workers, 2s 7jd per hour. These rates are to' be increased in the manner and to the extent prescribed by the court’s general orders of August 9, 1940, and March 31. 1942. It should be made clear that this pronouncement is not in itself a general order and therefore has no operative effect. It is purely an indication of the court’s future policy. It is also to be clearly understood that the adoption of the foregoing rates does not mean that a general increase of 3Jd per hour is necessarily to be granted in all awards and industrial agreements. Parties are reminded that this pronouncement is made for the purposes of the Economic Stabilisation Emergency Regulations, and those regulations authorise the court to amend awards and industrial agreements for the purpose only of restoring or preserving a proper relationship between the rates of remuneration of various classes of workers. A flat increase to all workers would not correct but merely perpetuate existing anomalies. The court does not Intend to make any pronouncement relating to standard rates for female workers or

for juniors. As soon as possible after this pronouncement is issued, the court requests that in all cases where applications for amendments are made pursuant to Regulation 39A (1) the parties should confer with a view to reaching agreement as to any amendments that should be made. Where agreement cannot be reached, applications should be made to the court for. a hearing. The circumstances are such, however, that the court will have to insist that all submissions of parties at such hearings shall be brief and to the point Regulation 39A (2) provides that, in making any amendment of an award or industrial agreement under these regulations, the court may direct that the amendment shall have effect as from such date before the date on which it is made, as the court thinks fit. The court announces that all such amendments made pursuant- to Regulation 39A (1) in respect of applications submitted within a reasonable time will be directed to have effect as from April 1, 1945. Inuflatlonary Effect

Mr W. Cecil Prime, the employers’ re presentative on the court, desires to add the following comment:— “In view of increases in wage rates which have been agreed upon by employers in cases affecting large numbers of workers, in addition to the increases recently announced for railways, public service, and post and telegraph employees, I agree that, the rates set out in this pronouncement are necessary to restore a proper relationship. While the increased spending power which will accrue as a result of this pronouncement m'v not affect appreciably the economic stability of the Dominion, it will almost inevitably tend to increase’ ,the inflationary tendencies which have been in evidence during the past few years. Workers who have accumulated small savings must not be disappointed if they find their savings depreciated in value.”