INCENTIVES NEEDED

Otago Daily Times, Issue 27384, 9 May 1950, Page 8

INCENTIVES NEEDED

Universities And Industry . ' In Dominion Incentives for sound finance in respect to universities in New Zealand, and incentives in industry, were the themes dealt with by the Rector of Canterbury University College, Dr H. R. Hulme, in his address at the graduation ceremony of the University of Otago in the Main Town Hall yesterday afternoon. Dr Hulme defined some incentives as economic, but held that the more important ones were concerned with the inner satisfaction of the human spirit.

“ Until recently, the method of financing higher education in this country has been unsatisfactory in that increases of grants were made only for specific purposes which had to be approved first by the conference of colleges and then by the Education Department. This detailed and central control of development gave little incentive to either good finance or good ideas,” Dr Hulme said. “ Within the last year, however, for the arts and general studies the Government has agreed to a scheme by which the income of each college will increase by a certain amount each year for the next five years. At the end of this time the situation is to be reviewed, and it is hoped that the grants for the following five years will be agreed on. Within these approved grants the colleges can spend their incomes as they wish. A University Grants Committee has been set up to operate this scheme. Its chief advantages are that it allows the University to plan its development. “The existence of some such scheme is necessary, in my opinion, if we are to avoid detailed control of the University by the State now that the State supplies most of the money,” Dr Hulme said, “but there is still one very important thing missing—an incentive to private benefaction. At one time, the two southern colleges in New Zealand were financed almost entirely by their own endowments and fees, and a gift made to a college meant that additional funds became available for the ultimate benefit of the students. Nowadays, there is a tendency to leave the whole of the responsibility to the State. I think, however, that it is urgently necessary for the Government to make a clear statement that any increases in the revenues of the colleges due to benefactions to, or economies- by, the colleges will not be made the cause for a reduction of the Government grant when the next fiveyear grant period comes up for review.”

Dr Hulme said that another possibility which was worth serious consideration was the remission of some fraction of estate duties on gifts made to institutions for higher education. The universities were grateful for the increased grants which the last Government made, but they had barely covered the great increases in the number of students and the general increase in the cost of living.

Dealing with industrial incentives, Dr Hulme said that he had always felt that the university should be an open forum for the discussion of all topics —academic, social or industrial. “By an industrial incentive. I mean an incentive to produce more and better goods or services, and I hasten to say that such an incentive need not be a purely financial one,” he continued. “ It may, and often does, take the form of a bonus scheme, that is to say, extra pay for a higher rate of production; but there are other important incentives to better work, such as good working conditions, joint consultation, training schemes and so on.” Dr Hulme referred to one type of incentive which had had a great deal of success overseas, but which at present was not operating in a great many New Zealand industries—the ordinary bonus incentive system. This, in its simplest form, was the payment of higher wages for greater production, sometimes with an agreed minimum wage, and sometimes a straight-for-ward payment according to results.

“I would like to emphasise that some of the arrangements which go by the name of bonus incentive schemes are not really this at all,” the speaker said. “The essence of a true bonus incentive stheme is that the wages are directly, linked with the amount of goods produced by a worker or group of workers. “Ultimately, the standard of living of a country depends not on the wages and salaries paid, but on the amount of goods produced by its industries — primary and secondary,” Dr Hulme said “If one industry or trade succeeds in raising its wages, others quickly follow suit, the non-manual workers get a cost-of-living bonus and private industry raises its salaries—and soon we are simply back where we started. The only difference is that on the average we are earning twice as much and the £ is worth 10s; but the situation is fundamentally different if the rise in wages is associated with increased production. Where carefully thought - out incentive schemes have been introduced—with the co-operation of the employees—the result has been increased earnings by the staff and increased profits, and in many cases the product has been marketed at a lower price, thereby benefiting the community as a whole.

“Where are the snags? ” the speaker asked. “Why have the trade unions opposed bonus incentive schemes, and why have such schemes sometimes failed dismally? I think the answer lies in the fact that very often certain essential conditions have been disregarded in the past. The first essential is that an incentive of any kind, once provided, must be regarded as a natural right of the employee, and not treated as though it were a benevolent gesture of the management. Secondly, an incentive plan is the mutual concern of the management and the workers, and should be discussed fully with representatives of the employers and the trades unions, and its rules defined and agreed on in advance. Finally, to be fully effective, the plan must be carefully thought out, the rate-setting done by fully-trained experts and the rewards for good work must follow quickly after the performance. “ In these days when a new discovery or a change in the world markets may deprive many men of their employment through no fault of their own, the State must assume responsibility for their welfare and reemployment. How to combine this with the need for harder work, increased production and cheaper goods is one of the most important problems Which we have to face today.”