WAGES LOWERED

Taranaki Daily News, 14 February 1931, Page 7

WAGES LOWERED

CUT FOR CIVIL SERVICE TEN PER CENT. REDUCTION AWARDS TO BE REVIEWED ' SPREADING LOWER INCOME POLICY OF GOVERNMENT (Government Memo.) Wellington, Last Night. A reduction of all Civil Service salaries by 10 per cent, as from April 1 is one of the means by which the Government intends to curtail expenditure and balance the Budget. This announcement was made by the Prime Minister, the Rt. Hon. G. W. Foi'bes, in the course of a comprehensive statement of the Government’s financial policy, today. A prospective shortage in the Budget for the next financial year of £4,500,000 is the problem facing the Government, and the amount is so large that I think it will be generally recognised that drastic measures and considerable sacrifices on the part of the people are necessary before the gap can be bridged as, of course,, it must be, the statement says. Foi‘ the most part the cause of the shortage is a shrinkage in practically all the revenue resources, which fact clearly indicates that the problem is not a passing phase due to any isolated incidents or miscalculations, but is part and parcel of the wider problem of adjusting practically our whole economic structure to the world-wide lower price level.

It follows that the restoration of budgetary equilibrium on a 1 permanent, and secure basis is a practical impossibility, unless and until general economic equilibrium has been restored, and that a' solution of the wider problems will automatically provide the greater part of the remedy for the budgetary difficulties. That is to say, the two problems are largely one and must be dealt with accordingly. This is the basic principle underlying the Government’s proposals. If a lower level of export prices is to prevail henceforth —and there appears to. be little doubt about' that — then our primary producers in particular and business in general cannot carry on unless working costs are lowered. Accordingly, what is essential is a cutting down of overhead and also direct working expenses. DIVISION OF INCOME. From another angle it will be apparent to all logical people that if a much decreased national income has to be divided among the same number of people as heretofore either a great many will have to go very short and. in other words, be largely unemployed, or each and every one of us must be content with less. Knowing the spirit of the people, I have not the slightest doubt that the general desire is that the burden should be shared by one and all and the Government will do its utmost to arrange matters to this end. As they are such a large element in the cost of practically everything, we must face the bard fact that nominal amounts of salaries and wages must be reduced. Accordingly, the Government proposes to make a 10 per cent, reduction in the salaries and wages of the Public Service to operate as from April 1 next. The reduction will apply without exception to Cabinet Ministers, members of Parliament and all classified salaries of permanent officers in all services, while corresponding reductions will be made in the wages of all temporary men, whether employed by the day or by the hour or otherwise. The reduction will also apply to Samoa, the Cook Islands and officers. overseas.

The wages on standard public works will be reduced to a basis of 12s 6d per day exce-pt for tunnellers, where the rate will be on a basis of l'6s per day. On relief works, the rates of wages will be on a basis of 12s 6d per day for married men and 9s a day for single- men. Concerning the wages of tunnellers and the differentiation in the wages of married and single men on relief works and other reductions to be made, I wish to point out that the amount of funds available for carrying on public works is limited, and the object of the Government in fixing these rates is to make the available resources go further, or, in otlier words, to spread employment as far as possible and as long as possible. Otherwise the necessary funds will be curtailed, and this will lower the number th ait can be kept employed on public works. Our unemployment problem is serious enough as it is, and the Government does not want to see it accentuated through t'he immediate discharge of large numbers of men from public works.

A reduction in the salaries and wages of the Public Service alone, however, apart altogether from the question of equity, would not achieve the larger object in view; that is the general lowering of costs throughout the Dominion. Accordingly I appeal to all -local and Other public and semi-public authorities * and to the community in general to follow the lead of the Government. I may Say that as far as Ipcal authorities and hospital boards are concerned, it is considered that th® benefit or part of it will be reflected in a reduction of the amount of subsidies paid from taxation. AWARD RATES OF WAGES. In regard to awards under the control of the Arbitration Court, it is proposed to bring down legislation to empower the court to review them in the light of the present economic conditions. It is expected that the benefit of the reduction in salaries and wages will he passed on to tlie public in one form or another. In fact, I wish it to be dearly understood that the Government v> Tl do its utmost and will use all its powers to gee that there is no exploitation of the situation. As a precautionary step the industries and commerce department is being instructed to keep the matter constantly under review in order io ensure that the in wages and overhead costs are reflected immediately in the cost of living. In fact, the Government is relying upon further bringing down the cost of living l o offset the reduction in nominal wages. That is why it is go essential that the reduction should be general and the benefits shared by all. In this connection it is pointed out that the figures of the Government Statistician show that the cost ing is already declining. The Dominion index of the retail price of food shows that whereas the cost of food in January, 1929, was approximately 49 per cent, abovife the cost in July, 1914, by December last the relative increase was onlv 37 per cent., which means a fall of *l2 per cent. Similarly, z the, “all groups” index fell during jthe fpriod

from November, 1925, to November, 1930, by approximately 4 per cent., and a further fall lias since taken place. A reduction in nominal wages followed immediately by a further reduction in the cost of living would leave the standard of real wages but little affected and I can assure the workers that the Government U most anxious that the standard’ of living should not, be lowered. At the same time the Government is convinced that under the present economic conditions it is in the real interests of the workers themselves that nominal wages should be reduced, as otherwise business generally will jstagnate and there will be little work for anybody.