BOOMERANG OF WAGE CUT

Taranaki Daily News, 8 August 1933, Page 6

BOOMERANG OF WAGE CUT

“ACCENTUATES PROBLEMS” | ■ — HAS NOT ACHIEVED ITS END. BOROUGH COUNCILLOR'S OPINION. DEFINITELY OPPOSED TO CUTS. That the policy of reducing wages when the depression made itself felt had merely accentuated the . difficulties of the Dominion was the opinion expressed by Cr P. E. Stainton when he opposed a proposal that there should be a further reduction in wages at a meeting of the New Plymouth Borough Council last night. ’ If reliance cculd be placed, on the statements of the world's most prominent and capable statesmen and bankers it would seem that the clouds of the depression had lifted somewhat during the past six months, remarked Cr. Stainton. There had already been a general improvement in practically all markets, and he felt definitely on the subject that such economy as wage reductions was • unwise at the present time. “It is important to ask ourselves and ascertain from all possible sources ‘have wage cuts achieved what it was intended / they should do?”’ continued Cr. Stainton. “I am being forced to the opinion that they have had a boomerang effect and further reductions will have the opposite effect to that intended. Probably the one statement that was repeated by all delegates at the World Conference was that ‘prices must be raised,’ and I would say here that the tendency seems to be to leave the adjusting of our present troubles to the Government, to the World Conference or to any one else than ourselves. We individually and collectively most certainly have our part to perform in the process of readjustment. I would ask what have we yet done as a council as the representative of the people of New Plymouth to help towards readjustment CONFIDENCE REQUIRED. “It is usually easy to diagnose the case but the task at hand is to prescribe the remedy,” he continued. “If it is accepted that prices must be raised before recovery will take place, is that consistent with reducing wages? Prices are governed by supply and demand, and with reduced purchasing power there must be reduced demand or reduced prices. It is significant that various local bodies throughout New Zealand are restoring the cuts already made rather than inflicting further ones, and personally I think we have to try to lift ourselves out of the depression by eliminating waste, profiting by our experience and encouraging a return of confidence in / place of the ‘depression shock’ that exists at present.” Being a fairly substantial ratepayer himself, Cr. Stainton said, he was not unmindful of the great difficulties of most ratepayers in finding the necessary money to pay their rates, but after carefully considering the position he was forced to the opinion that wages cuts had been in no small measure responsible for the difficulty a large number of ratepayers had in paying rates. “Take for example the ratepayer who has his money invested in town or suburban property,” he said. “Through the reduced spending power his tenants must have a substantially reduced rent and possibly can pay only irregularly. This means practically a dead loss to the ratepayer landlord as his capital costs are not correspondingly reduced. Ask the tradespeople how the reduced wages have affected them? Take for an instance our tramway department revenue when the cuts were introduced.- The figures from June to May. were £20,974 in 1930-31, £18,360 in 1931-32 and £18,136 in 1932-33. It will be seen that the JO per . cent, reduced spending power was immediately reflected in the tramway returns, and this is typical of all businesses.” Cr. Stainton asked if the council would . be doing right to agree to further reductions. Would it be fair to the ratepayers and employees? Was it justified considering the very healthy position of the borough, finances? The council decided by six votes to three against further .wage reductions.