Dangers Of Rising Wages

Chronicle (Levin), 19 June 1948, Page 5

Dangers Of Rising Wages

Press Association)

Labour Leaders At Variance Ori * Crucial Issue

(Per

WELLINGTON, June 18. The dangers they consider inherent in the poliey of pressing for vvage and pehsion increases are stated by Mr. E. P. Walsh, vice-president of the New Zealand Pederation of Labour, and Mr. W. N. Pharazyn, secretary of the New Zealand- Clerical' "Workers' "Union, "in a report to the Pederation on monetary reform and industrial unrest, They deelare that the New Zealand workers already have a larger relative share of the total goocls available than have the workers of any other country, and that whereas further increases in ' the standard of living mu'st come from increased production the rate of increase in farm and industrial output in Kew.. Zealand is well below that of, for instance, Britain and the United" States. '

, The difference within the Federation of Labour over propo^als for wage and pension increases and monetary reform has led to the presentation of majority and minority reports to trade unionlsts 011 these issues.'- The majority report from the Monetary Reform and Industrial Unrest Commiittee of the last annual conference of the Federation at Dunedin which. has . just been. published to the unions proposeg further measures for the control ..of eurrency and eredit by the State through the Reserve Bank, the removal Of tne wage-f reezing section of the Eeonomic Stapilisation system, and a move by the Federation of Labour for a general increase in wages and pensions. This report has been presented. by the presid1 ent of the Otago Trades Council (Mr. W. B. Richards), former viee-p'resident of the Federation and convener of the committee. Other members of the eommittee were Messrs. W. A. Fox, F. B. Walsh, F. G. Young, W. N. Pharazyn, C. Bropthy, J. M. Arthur, T. Hill and 14. Barnes. The minority report signed by Messrs. , Walsh and Pharazyn argues that the State has ■ already assumed control of credit and eurrency through the Reserve Bank and that the stahUisation policy must be preserved in au its phases. The majority report states that after considering proposals originated by the Hotel Workers' Unjpn the rolJowmg propositions were made by a majority of the committee: 1. To make the State tlve sole authority for the issue and control of both credit and eurrency. 2. To plaee a statutory obligation on the Reserve Hank to control curreney and eredit so as to maintain a stable inlernal price leve'l. 3. That' price control should be made more eff'ective with a view to redueing prices. . "4. That the wage-f reezing section of stabilisation be ab.olished and that the Federation of Labour press for a general increase in wages and pensions. It was stated that; in the opijiion of the majority of the eommittee niuch ot the root cause of » industrial unrest would be removed if these recommendations were adopted by the Government, The natio.nal executiye of the Federation has decided to., rcfer the first two point's in the committee 's r'efiort to the Minister of Finance (Rt. Hon. Walter Xasli) for eomment. The third is already being pressed and on the fourth it has referred unions to the already declared support given by the conference to the eeonomic stabilisation policy. Messrs. Walsh and Pharazyn eiaim that to the extent that control of eurrency and credit can be effective towards bringing about " general price stability, the neeessary measures have been put into efl'ect through the Reserve Bank in accordance with Government poliey. The prineipal of these measures is restrietion on advances by trading banks on Reserve Bank instructions,' sa.v Messrs. Walsh and Pharazyn. The potentiality for trading bank advances is very great and if allowed free rem ' would bring about considerable monetary inflation and price instability. The control exercised ' is effective m ilealing with this danger. Another possible source of monetarj' expansion, they continue, lies in the power of the Reserve Bank to advanee money to the Government, but since the early period of war financing when limited reeourse was had to the Reserve Bank, the Government use of the bank has been restricted to the requirements ot the housing and marketing acCounts.

The prineipal cause of monetary inflation in Xew Zealand has been the' fact that- the proceeds from overseas saies of our produce hafce not beein fully disbursed in the purchase of the equivalent value of imports from overseas. Hence a consideraute quannty oj "spending power accumuJates in the hands oi people. To freeze or reduee the availability of this extra spending power by the arbitrary action of the Reserve Bank would, m their opinion, have constituted deliation and the results would be harmful and -unjust. They argue that the remedy hecomes automatic when it is possible to brmg m the equivalent value of imports. For effective staoilisation ail ffelds must come within the orbit oi staoilisation. If the conference should aecide to instruct the Federation to press for general increases m wages and pensions, say Messrs. Walsh and Pnarazyn, it must understand that evqry general increase in wages will mean a corresponding increase in eurrency and will make tne maintenance oi the present price levei much more difficult in s.ome instances and absolutely impossible in others. Poi this reason they feei that the conference should most "carefuily con sider both the eeonomic position oi the country and the present conditions of the vvorking class in New Zealanii before embarkxng on the course ' which might produce results the very opposite of what is wanted. Figures can be quoted indicating that the workers of New Zealand already have a larger relative share oi the total goods available than the workers of any other country of the world, and the tendency is for that share to increase. Any further considerable increase m standard of living must come from increase production, but here available information is much less favouraoie to New Zealand, say Messrs. Walsh and Pharazyn. They quote figures showing increases in production by voiume, fiot money, in the United Btates, Britai.%and New Zealand. These figures shoiy that in the United Btates since the beginning of the war farm production increased by 43 per cent. and industrial production by 80 per cent. The annuSl production of coal and steel has risen by tvvo-thirds., In Britain the voiume ot commodities available for export has increased by 38 per cent. — the budget for this year is for a 50 per cent. increase. New Zealand on tlie other hand with everything ■ in her favour and not devastated hy war has in the period 1938 to 1946 increased her farm production bj 9 per cent. ana her factory production hy 36 per cent. which is a total overall increase of only 12 per cent. Messrs. Waish and Pharazyn deelare: "The whole eeonomic poliey of the Government is based upon our ability to maintain stabilisation. If we can do that, and if we can increase production, and if without help Britain is abie to continue taking our exports and to give us in exchange the essential goous we require for our primary iudustries and rAw materials for our factories, then only will.it be possible to bring about a reduction in - the prices of the neee^sities and luxuries of life. And then only will the workers of Xew Zealand enjoy a higher standard or living. ' ' Messrs. Walsh and Pharazyn draw the attention of unionists to the fact that successive eonferenees of the Fed eration of Labour since 1943 and" including the 1948 one, have endorsed the policy of eeonomic stabilisation.