Wages And Prices

Wanganui Chronicle, 20 December 1950, Page 4

Wages And Prices

Sir. —Your contributor David H. Wilkie in yours of 13th inset is apparently coming to realise, that we have always been in favour of the worker receiving the full benefit of his labour, and that hj is entitled to an income compatible with his industry and ability. A worker’s commodity is his labour, which he is reasonably expected to sell in the highest market. But, unfortunately as in other commercial transactions, the estimate of ones value of his services, is really decided by the purchaser, who ultimately’ set's, the standard of value. Your correspondent is a purchaser of other men’s labour, as every other of the community, and he apprises the value of labour by the price he is prepared to pay for his purchases, i.e. goods and services. In manufacturing, whether it be furniture or any other goods, the cost is determined by the price the manufacturer pays for his raw materials, accessories, and other items which go to make up the cost of the article, including wages and over-1 head. When wages rise, the cost of all raw materials etc rise in sympathy, as in them all is reflected the increased cost of other men’s labour. Your correspondent evidently does not understand that the high cost of goods today are not profits, but increased primary costs, which have always been the propelling force in rising prices. To say that profits have Increased 175 per cent is sheer nonsense. Profits in percentage are always based upon the actaul cost of the goods themselves. When goods rise in price, it is because they cost more to produce. Your correspondent says, “it is up to the emnloyers to reduce prices, and thus bring the cost of living down.” How can they do this out of a meague 6 to 7i per cent profit on the cost of manufacture? This at once establishes the fact that he cannot "absorb increased wages out of profits.” The ramifications of increased wages'are the determining factor, not profits, in calculating increased costs. From the manufacturer the goods reach the consumer through the wholesaler, and finally through the Retader. The Retailer purchases the goods. displays them for sale, arranges terms of credit, and waits for his money. To do this he must, have adequate storerooms and showrooms. with a sufficient service to serve his customers. His rent, rates, insurance, depreciation, delivery, | maintenance, bed debts, and all in- t cidentals, including the wages of his staff, the salary of his manager, and | his own living must come out of the ; percentage he is allowed by law. Re- j tail profits today arc small, conse-' ouently the nett results on the years | trading ma” range from 5 to 10 per ; cent with the average Retailer. The cause of high prices cut much deeper than profits. This is an old bogey used by all Leftists to blind the eye of the workers to the real issue. Profits todav are controlled by 1h» Price Tribunal. co<-ts are not. in fact high wages and high costs have : been encouraged by past administra-| tion to satisfy the demand for increased wages. We cannot have lower prices, without lower cost, and in-1 creased volume of production | To stabilise wages with other | incidental safeguards, and to increase, production and turnover, would help I the peonlc to maintain hotter pur-1 chasing power, and increase the value j of wages, thus making the pound buy! more. I am etc. S.J. SULLIVAN. I