The Timaru Herald MONDAY, DECEMBER 29, 1930. ARBITRATION COURT’S EDICT.

Timaru Herald, Volume CXXXIII, Issue 18762, 29 December 1930, Page 8

The Timaru Herald MONDAY, DECEMBER 29, 1930. ARBITRATION COURT’S EDICT.

Enforcing the greatest cut in wages ever effected in New Zealand, the Arbitration Court, in providing for a reduction of 33 1-3 per cent, in the wages of flax-mill employees in the Manawatu district, lias taken recourse to a new and somewhat revolutionary principle in the fixation of wages. The employers supported their demand for a substantial reduction by pointing out that because prices of flax have receded very substantially in the world markets, the industry has been brought to a standstill. The cost of production on the basis of existing wages is between £23 and £25 per ton, while the present market price of the commodity is between £lB and £l9 per ton. The workers themselves were not blind to tlie stagnant state of industry, but they will be shocked by the reduction of wages to a minimum ; of 10/- per day. The president of the Arbitration Court, Mr Justice Frazer, in the course of an important addendum to the Court’s decision stated that

“surplus capital invested in the industry has been lost as well as surplus profits for years, which had been put back into the industry, and even on the basis of capitalisation written down drastically to meet the conditions now prevailing, flax-milling cannot show a profit unless the market improves.” The Court presumes that a substantial reduction in wages will revive the flax-milling industry, but the spokesmen of the Labour Party, who view the Court’s decision with alarm bordering on anger, declare that they subscribe to the doctrine that an industry that cannot pay standard rates of wages should go out of existence. In the past, however, flax-milling has been a profitable industry, and it is confidently anticipated that revival is not beyond the bounds of possibility. In 1!)1S, the value of exported flax was £1,405,000, but that was the peak year, and since then it has declined to such an extent that ten years later the exports were worth only £39-1,450. Mr Justice Frazer, in offering justification for the Court’s decision said: “The present case is one of the type, in my opinion, in which a departure from the Court’s standard is both necessary and justified.

“In 1900, Mr Justice Martin, then Judge of this Court, stated that if an industry could not pay standard rates of wages it should go out of existence. He was speaking at the time of a manufacturing industry, in no way related to the primary products of the country. Essential primary industries, however, cannot be dealt with in this manner; and the flax-growing and milling industry, if not an essential industry, is of sufficient importance to be given an opportunity, at all events for a limited time, of maintaining its existence. “Apart from any other features, it is important to note that the flax-milling industry is properly classed with our agricultural and pastoral industries. Flax is grown and cut by the flax-mill proprietors in much the same way as other products of the soil. Most millowners own or lease large areas of flax-swamp lands, on which the flax is cultivated. The farming industries in New Zealand are not governed by awards, except in regard to certain special operations. “It appears anomalous, therefore, that the flax-growing and milling industry 6hould be subject to award conditions; and this circumstance, coupled with the fact that in other flax areas, outside the Manawatu district, no awards exist, has influenced me in deciding to grant the present application.”

It is not surprising that the Court’s decision should have been accorded a mixed reception. Labour men are agreed that the 33 1-3 per cent, reduction is too drastic, and they point out that by bringing the minimum wage down to 10/- a day, the Court has fixed a rate below the general labourers’ award rate of 15/4 a day, and the Government rate for relief work of 14/- a day. The award provides in effect that a flax-millworker will receive £3 a week if full time is worked, while a man engaged oil relief work need work on 4J days to beat the flax-mill worker in his week’s earnings. On the other hand, the spokesmen of the primary industries regard the flax-mill award as an indication that “the Court realises that wages cannot be based on the fallacious principle known as the cost of living, and that economic law cannot for ever be flouted.” The Court's departure from the cost of living principle in fixing wages cannot be taken as an indication that all the awards will be attacked from a similar angle, since the general acceptance of the principle of determining wages on the temporary stagnation of certain isolated industries would lead to an entirely new basis being chosen by the Arbitration Court for the formulation of its decisions, but this should not be permitted without the sanction of Parliament. The Court’s decision ; on the flax-millowners’ applica-

tion is less serious than appears on the surface. The decision virtually means in effect, we think, the suspension of the award. If the employers can prevail on their employees to rally to the task of reviving the depressed flax-milling industry in the Manawatu district, they will not be hampered by an arbitration award in making terms with the men. The Court has merely fixed the minimum wage at 10/- a day, and it will be seen at once that this decision will afford the employers more discriminatory authority in the control of the industry and give more latitude in the selection and the payment of enterprising labour on the basis of results. Mr Justice Frazer has laid down the principle that the minimum wage “should not be so high as to be oppressive to employers in times of temporary depression”; but it should he urged that the ability of the worker, the cost of living, and the capacity of the industry to pay should be considered in fixing wages, but as some of the critics of the Court have repeatedly insisted, one of these factors ought not to be given undue weight to the restriction of the others, for it is in this direction that the Court lias so frequently erred and called down upon its head the fierce criticism of interested parties.