LETTERS TO JOHN SMITH

Taranaki Daily News, 28 August 1930, Page 9

LETTERS TO JOHN SMITH

ECONOMICS FOR ALL WHY WAGES MUST FALL. WORK IS WORTH LESS NOW. This is the seventh of a scries of letters written for the Melbourne Herald by Professor L. F. Giblin, Ritchie Professor of Economics in the University of Melbourne. They are an attempt to tell plain men in plain words why Australia has drifted into economic trouble, and how she may recover. Readers will have no difficulty in making the necessary mental adjustments to apply the lessons to New Zealand. VII. Dear John,—We were trying- to reckon out what w'ould be the result of dividing up all incomes equally for the 12 months/ ended last June, when Australian in'come was the highest it had ever been. Wo found there was just enough to pay all workers of all kinds exactly the average rate of wages ruling .in the middle of that 12 months, and leave enough over to pay income tax and similar taxes. But there would be practically no savings at all, and there ought to bo at least £50,660,000, Nobody would get more than £5 per week. (Pretty rough on Air. Scullin and on your friend the linotypcr!) And there would be nothing at all for those people who have no occupation, but simply live on their means.

Is there anything wrong about. the figures? The numbers of people working for their living are based on the last census, and cannot be far wrong. The. average wage rates for December, 1928, £5 0s lid for men, and £2 13s lOd for women, are those given in the last “Labour Report” by the Commonwealth Statistician. These averages have been calculated .for the last 15 years; they are the averages of wages in 030 industries and 4256 occupations. The rates in these occupations are either those fixed by an industrial award or the information is supplied by the union secretary. Certain kinds of labour are omitted, particularly unorganised farming labour and casual labour. But the figure does give the average, very carefully calculated, of wage-rates for all organised regular labour in Australia. There is only one doubtful point. We don’t know the average wage of those, under 21 years, of whom there are about 320,000 male and 180,000 female. Those from 19 to 21 will generally bo earning full wages. Those at 14 or 15 may be getting from 20s to 30s a week. I have put them all at .the. average women’s wage, and I think this is about right for’ organised trades working under an award. But it may be too high. If it is £2O a year too high, there would be a small contribution of £10,000,600 to our £50,000,060 of necessary savings.

The only other figure to consider is that for total income, £650,000,600. It has been calculated by Air. Sutcliffe and by/Dr. Benham, of Sydney, and. their calculations would work out at about that figure for 1928-29. Alany people have criticised the work, and tried to correct it, and cut a little off here and add on some there, with the result that the total has not been much changed. I admit it is not an exact figure, and the real total may be £30,000,000 more —or less. Aly own opinion is that the true total is less rather than more. But even if it is £30,000,000 more, we still should not have enough over to make up our present actual savings. I think, then, there is no escape from the fact that if all income was divided up equally after taking out our present savings and taxation, there would not be enough to give everyone, millionaire and unskilled labourer alike, the average wage now paid in organised trades. But we know as a matter of fact that we do pay this taxation and make these savings, and that there is a good deal of income besides above the rate of £5 a week. What is the explanation? The only possible explanation is that a great many people not working under a regular award must be getting considerably less than the average of organised labour. These will include wageearners on farms, and all kinds of people working on their own accounts, and particularly the “farmer on one-mam and two-man farms. « *2 * « Some important ami unpleasant conclusions follow: — (1) Even before the depression when our income was at its highest, it xvas not big enough to pay everyone, employer and employed alike, the average wage paid to organised labour. A small section .was getting a good deal more than the average wage. Some part of this extra income they were earning because they were doing work which was worth it; for the other part they were doing nothing very useful in return. A much larger section of our people was getting less, many a good deal less than the average wage. So we have to conclude that organised labour was getting a larger share of the national income than it earned. So far as there were big incomes that could be cut down, the benefit should go, not to organised labour, but to farm workers and farmers and others working on their own account.

(2) If this was the position a year ago, now when we have had one-tenth or more knocked off our income, it is pretty clear that wage rates in organised labour are higher than the country can afford. The same amount of work is worth less now by a good margin. If a year ago organised labour was getting more than its fair share of the country’s income, it must be still more true today. So I think there is not much doubt that wage-rates in organised labour must fall for a while. The more readily and quickly they fall now, the sooner we shall be in a position when they can increase again to the present level and, I hope, above that. To-morrow I want to talk about what you can do, John, as wage-earner, good unionist, and voter, to restore and increase wages.—Yours, etc.,

L. F. GIBLIN, Ritchie Profess of Economics, University of Melbourne. July l">th, 1930.