WAGE RATES

Timaru Herald, Volume CXXXVIII, Issue 19941, 27 October 1934, Page 14

WAGE RATES

NO JUSTIFICATION FOR INCREASE

EMPLOYERS’ STATEMENT

Special to “ The Timaru Herald” WELLINGTON, October 24

“Unfortunately there is nothing in the economic situation of New Zealand to-day to justify a general increase of wage rates and the assumption that a raising of wage rates would increase purchasing power and restore prosperity is a fallacy. In fact, in so far as the raising of wages has the effect of increasing internal costs and prices the total purchasing power of the community would be decreased rather than increased.”

The New Zealand Employers Federation made this statement of its policy at its annual meeting to-day. in the annual report. The report reviewed the wages question at length, stating: “We do not propose to criticise the action of local bodies or of the Government in raising the wage rates of their own employees, but this federation must take cognisance of the fact that such action must intensify the pressure by organised labour upon the employers to raise wages in industries, and those who do not look beneath the mere surface of things jump to the conclusion that if the local bodies and the Government can afford wages increases it follows that industry can also afford them “The fallacy of that conclusion however, clearly appears on more careful consideration. The local bodies and the Government do not have to earn the income out of which they pay wages and salaries, but in the case of industries the only source of revenue is the sale of the product of industry and the amount of the purchasing power of any industry depends upon the selling value of the products of that industry in relation to the selling of the products of other industries.

“It is frequently stated that a reduction of wages transfers purchasing power from the workers to the employers, but this is not quite correct. For example, if the price obtainable for any class of goods were falling, the total purchasing powers of the industry producing those goods would be shrinking correspondingly. A reduction of wages at such a time might reduce the purchasing power of the workers, but the employee might still be left without any purchasing power if even the reduced wages absorbed the whole proceeds of the industry. It is true, however, that a reduction of wage alters the relative proportions of the total purchasing power of any industry controlled respectively by the workers and by the employers.

“It is clear that the reduction of wages in 1931 had the effect of making the workers accept their share of the loss of purchasing power which the whole country suffered because of the fall in prices of our exported products.

“The reduction was not too great because since then retail prices have fallen more than wage rates. Without a reduction, costs could not have been lowered to meet the reduced prices obtainable for goods. “The aggregate purchasing power of the country was not lessened by the reduction of wages though there was some transference of purchasing power from workers to employers; to the extent that this transferred power was not exercised the local consumption of goods has been affeffeted but not otherwise.

“While the purchasing power of exports over commodities in New Zealand remains at about 65 per cent, of what it was in 1914 and in consideration of the necessities of our export trade no impartial observer could pos-

sibly advocate any action which would tend to increase our costs.

“The only thing that will restore I prosperity to New Zealand is to restore the effective purchasing power of the export industries. “It is claimed that because the Court of Arbitration was empowered to make a general order affecting all wages prescribed in awards and industrial agreements in 1931, it should be given power now to make another general order, raising the present wage levels if, on consideration of the evidence, it could be found justifiable. “The circumstance are entirely different. In 1931 New Zealand suffered, in common with the rest of the world by the appallingly sudden fall in commodity prices. Our national income was so greatly reduced that economies in all directions were necessary. The Government was able to affect economies in its own expenditure, but employers in industries, apart from Government services, were in nearly all cases bound by industrial awards or agreements, and they could not effect any economies in wage rates until those awards or agreements expired; and even then there would have been no uniformity in the reductions and the general effect of a uniform reduction upon costs would have been lost. “Further, although the Court of Arbitration made a general order as to wages under awards and agreements, it affected only minimum rates of wages, and it was in no way compulsory that employers should make reductions which the general order authorised them to make. In the intervening period the Arbitration Act has been amended, and as a result of that amendment many industries are to-day free from awards or industrial agreements. A general order of the Court could not now, therefore, be made to have nearly so wide an application as had the general order of 1931, and further, if a general order increasing wage rates were to be made it would be compulsory upon all employers, irrespective of whether the industries were all equally able to conform to it or not. “The federation has always enunciated as a policy that the wages in any industry should be as high as that industry can afford to pay, and that is all that can be enunciated to-day.

“For the reasons above given, we are of the opinion that a general raising of rates of wages would not be in the economic interests of the community. “If there are some industries finding their circumstances so improved, as compared with the circumstances existing in 1931-32 as to justify their raising of their own wage rates, they can only be applauded for giving their workers a share in the improved prosperity,”