Wage increases

Press, 13 February 1986, Page 20

Wage increases

Sir, — I suggest that a major effect of large wage and salary increases is to make lower-in-come people worse off. Apart from the direct effects of pushing up the costs of goods and services, there are the indirect effects brought about by inflation. While wage increases to lower-income groups can cover the direct effects and bring about a short-term advantage, they cannot cover the indirect effects, namely increased interest rates and the wealth siphoned off from the community by inflation profiteering. The short-term advantages of wage increases thus turn into long-term losses for the lower-paid. If those who are already enjoying comfortable incomes win large increases, then this must sooner or later bring about civil strife and play right into the hands of Marxist revolutionaries. — Yours, etc.,

GEOFF. LEICESTER, February 11, 1986.

Sir,—l do not think the Prime Minister is on very firm ground when he criticises the pilots’ attempts to relate pay to the findings of the Higher Salaries Commission. After all, members of Parliament have just been awarded very substantial pay increases through this commission. I think such criticism re-

fleets some very deep doubts about the whole mechanism of wage fixing in this country. It would not surprise me if some members of his caucus are beginning to see what they have done with the recent wages round — put the very existence of this Government at risk and further down the line, the continued existence of the Labour Party itself. It is no use blaming trade unionists and employers for the unsustainable wage increases. This Government has simply made no determined move to put into place the legislation which would provide New Zealand with a modern market-oriented wages policy. — Yours, etc., ALAN FALLOON. February 12, 1986.