ARBITRATION AWARDS.

Observer, Volume XXVIII, Issue 26, 14 March 1908, Page 2

ARBITRATION AWARDS.

The Test of Bad Times. WILL the Arbitration Act and its wages awards survive the teat of bad times ? This is a problem that is at la9t in a fair way of being solved. So long as the prices of our produce remain high, and the demand, for labour exceeds the supply, it goes without saying that the rate of wages fixed by these awards will be paid. But what will happen when prices fall, when money is scarcer, and when employers find it unprofitable in manufacturing industries to employ labour at the rate of wages fixed by a court ? We are on the eve of getting an answer to this problem. The prices of some of our staple products have already fallen. The money market is already more stringent. In the flax industry, the millers prefer to close down rather than pay a rate of wages under the award which leaves them no margin of profit.

We read in a press telegram from the South that " When the flax boom was at its zenith the employees at the mills appealed to the Court to bring them under an award. Times being good, and both masters and men optimistic, a schedule was arrived at very much in favour of the employees. Matters went along swimmingly for the time, the millers were making money, and the • flaxies ' were getting extraordinary wages. Now the slump has come, the hemp market is depressed, many mills have closed up, and the majority of those still in business are mainly ' marking time ' to keep their plant and properties in working order, and their options from lapsing. Numbers of the workmen would be only too glad to obtain employment at a reduced wage, but they are met with the difficulty that the law is dead against it. The question is how are the mills to be kept open? This knotty problem is to be discussed at a conference of masters and men, to be held at Foxton shortly."

This is a crisis that was bound to come about in more than one branch of industry sooner or later. The rate of wages must be controlled by the value of the goods produced more than by any award of a court. If the award is accepted as the determining factor, and not the value of the production, there must eventually come a point at which the manufacturer will refuse any longer to employ the labour that is unreproductive. This point has apparently been reached in the flax-milling industry, and it may come about very shortly in relation to wool, to say nothing of many other products that are dependent upon fluctuating markets.

More than one President of the Arbitration Court has foreseen the situation that is now arising. When Mr Justice Cooper sat on the arbitration bench, he was asked to fix the mining award for a longer period than three years, and he declined. His reason was this : He said that he had lived his life in New Zealand, and understood the conditions of trade, and in fixing the periods of awards he was always face to face with the conviction chat the time would come when it would be unprofitable to pay these rates of wages. Then he would have the men coming to him and asking him to cancel the award in order that they might be able to obtain work at the rate of wages that the employers were willing to pay.

In the case of the flax industry, the wages were fixed by award on the basis of the high market prices prevailing, but since then the price has fallen. The situation chat has now arisen shows that these awards of the Arbitration Court may prove as disastrous as a lock out to the wage earning classes when hard times come. The flax operatives are willing to work for lower wages, consistently with the lower values prevailing, but the award makes it punishable to employ them at any less rate. Consequently, the mills are being closed all over the country, and the hands thrown out of employment. The same thing may happen with the dairying business, the wool trade, and any number of branches of industry.

It is not in any pessimistic spirit that we refer to the fact that the indications point strongly and conclusively to the fact that there are bad times ahead. It will be interesting to see how these times, whan they break upon us, affect the awards of the Arbitration Court. Our own opinion is that they will put a sharp and decisive end to the whole system. If it becomes unprofitable to employ men at the rate of wage? fixed by law, they will be thrown out of employment, and the result will be a state of misery and chaos such as has never been contemplated Then the cry will be for work, as it is in the flax trade now, at whatever wages the employer can afford to pay.