AN INTERESTING REVIEW

Dominion, Volume 14, Issue 56, 30 November 1920, Page 7

AN INTERESTING REVIEW

: •STATE OF VARIOUS INDUSTRIES CAN THEY PAY THE NEW BONUS?

Mr. W. 'Pryor, secretary of the Employers' Federation, yesterday told tho Arbitration Court what, in his view, vould .be tho effect upon certain, indusJries if they were compelled to pay the s. cost-of-living bonus concerning which .tb« Court recently mado a pronouncement. ' ' _

The Government Railways wero first ■Mentioned. "Here," said Mr. Pryor, ''there is 110 doubt as to the exj;ra charge tohioh. will have to be paid, as it has oeen officially' stated that the ss. bonus, jfill cost the Railway Department over a lnillion pounds per annum, and other Government Departments another million pounds. "Taking the Railway Department alone, however, official records show that during the war period expenditure has increased by approximately .£850,000 per anJium, which has necessitated the raising pf freights and passenger fares by 10 per .tent, during that. time. This, however, Jias not proved sufficient to meet the .increased expenditure, as from. April I 1 to October 16 this year the • revenue increased by \£6Bo,oooj while the expenditure Increased by; ,£900,000 during the same period. It, is therefore ovidont that if the proposed bonus has to be paid, and fares will require, to bo increased'by a further 60 per cent,, or, in other words, by one hundred per cent. '6ver 191-1 rates. The most casual ofc server, therefore, must realise that the fproposal is a-serious one to the Department, and that to impose this very heavy extra charge would result in an almost complete collapse of traffic, and at the least could only have exceedingly disas'trous results. Such a state of affairs .would mean that traffic would have to be cut down to a minimum, and unemployment would be experienced by the great majority of the railway servants of the Dominion. Charges would have t? fca iii-'-creased lo such an extent, and tho services would be so inefficient that this alone would to all intents and purposes cripple industry. . " v Municipal Tramways. ■ "Inquiry with regard to the position as It affects municipal tramway .-undertakings olso 'disclose an unsatisfactory state of affairs. In Auckland, Wellington, and Christoliurcli, largely, inoreased wages and 'improved, conditions of work were conwiled in. the early part of this year. These 1 caused considerable increases in expenditure, which it. was proposed to meet in each case by raising fares and Withdrawing concessions to the public. In Auckland, the increases imposed appeared in be just about sufficient to meet the increased expenditure, assuming that no Berious breakdown or stoppage of work occurred. It is estimated that the new bonus, if paid, will entail a-further increase in expenditure of ,£31,500 per annum, .£17,500 to tramway employees and. *£14,000 per annum to other council omplovees. The eifect of tho recent increases in fares has been to restrict traffic, especially on short distances, but on Sundays especially, when the increases in fares are greater than on other days, they have resulted in a very marked reduction in the number of passengers carried. If the extra bonus has to be paid, it will undoubtedly result in a further decrease of traffic, and there is great danger that the reduction in the number of passengers carried would Ijb so great as to entirely disorganise tho whgle system, and make it practically impossible for it to my its way, and thus impose a serious .burden on the ratepayers in that city. "In Christchurch, the payment of tho bonus would entail a further expenditure of £14,000 for wages, and would probably have serious results, such as might bp experienced in connection with the Auckland system: - -The .Wellington-Service., "In "Wellington,- published figures indicate what might be deemed a grave condition of affairs. It is estimated that in ' connection with the ' tramways the increased cost would amount to jE15,000 per annum for tramway employees alone, which, amount ' .would be about doubled when applied to other council employees who would be affected. So far as the tramways are concerned, it is shown that the increased fares - imposed to meet the requirements of the last agreement have proved considerably short of the amount needed to meet the.- increased expenditure. The Position appears to be mat during tho first 82 weeks of the current financial year, with a- credit to begin of £4971 the debit balance at the end of tho period was .£9482; thus indicating a totalJoss for the .time mentionod.- o{ over "-214,000. If to that is added an increase in the wages bill of 000 per annum there is-grave 'reason to fear that the raising of fares to provide for an extra twenty or thirty thousand pound? of revenue' would more than likely result in such.a diminution of traffic as in all probability to bring about a lessened instead of an increased income.

"in all these three large city services there is considerable risk that the application of .the ( Js. bonus would result in a loss which could not be met by increasing the fares and whicli would mean that , the services would cither have to be unduly restricted or the deficits made : f;ood by imposing extra burdens on the taxpayers. One hardly needs to remark that such a restriction of the services as indicated above could only result in a large amount of unemployment. Private Enterprises, "Notwithstanding- the complete evidence with regard to Government and municipal enterprises to show the grave danger that exists in imposing a further bonus it is felt that particulars with regard to private enterprise should now bo supplied for the Courts information. "As the Court is probably aware the, leather trade generally is in a very bad Btate, owing to the drop in prices of hides, and abnormal importations from Australia- Boots of Australian manufacture are being sold in New Zealand at prices with which the manufacturers ol this Dominion cannot compote. The fact is that without tho payment of any further bonus, hands have fon dismissed, and in some factories only lmlf-'time is being worked. If the bonus has to be paid there is no doubt tlmt many more bands will be dispensed with and unemployment in that trade will become rife.

"The furniture trade'is another industry which has shown a'quietening tendency during the past few months, and is indicative of the public demand for lower prices.. Three months ago thero wore licit enough nien available for the work that was offering. To-day men have been dismissed from some of the factories and are looking for work. lor the past two or three years the trade has had more orders than it could supply, and most factories were refusing to undertake work that was offering. Recently numbers of orders that were on hand have been cancelled, and to-day many of the factories are on the lookout for new business. In this trade the wages cost represents, generally speaking, 50 per cent, of the value of the, output. The usual practice in fixing the selling price is to add 100 per cent, to the wages cost, and from ten to thirty-three per cent, to the value of tho material used, It will thus be. seen that wages are an Important item in the cost of the manufactured articlo, and that the adding of a further bonus would not only add materially to the selling price, but would effectually prevent any attempt to revive the trade by a lowering of prices, while it is certain that unless prices can bo leduced unemployment will increase in this trade ajso..

"In the engineering trade, so far as jobbing is concenie<l, anj increase in cost •will simply be passed on, but manufacturers of dairying utensils and agricultural implements, who are already feeling the yessuro of renewed overseas competition, find themselves face to face ivith a reduction in prices which they will be unabie to submit- to if the bonus is imposed upon them. Contracting lirms who have to compete with manufacturers from other countries rind themselves compelled to quote firm prices for contracts which may tako anything from six months to two years to complete, and as these contracts have usually to be taken on a very narrow margin of profit, the increased cost of any bonus which might have to be paid would have to be met by

the contracting firms themselves on work which a comparatively email increase in the cost of production would Tesult in loss to those concerned.

Wholesale and Retail Trades. "The wholesale and retail trades of the Dominion are in a position in many ways different from that of others who have bren affected by the present position of affairs in New Zealand. During the war period tho greatest difficulty has been experienced in securing the necessary supplies, while, on the Other hand, the demand for all classes of goods was prdbably greater than ever before in the history of these industries. Tho result was that a practice arose of importers ordering more than their actual requirements in the hope that a sufficient quantity of the goods ordered would be received to keep their .trades going. As a result of the abnormal situation very many lines of goods were ordered without any limit as to prico or as to time of delivery, with the result that in consequence of the drop in trade in the United Kingdom orders have recently been completed which were, given one, two, and in some caws three years "ago. Unfortunately, the Home manufacturers, taking advantage of the situation, have charged the prices ruling at the time, of shipment, whi(\h means that tha wholesale and retail warehouses of the Dominion are full to overflowing with goods which have to be paid for at the top of the highest prices which have ruled during tho war period. In conseeiucnce of the banks' policy of restricting credits, many merchants find themselves with difficulties regarding finance,,and with large stocks, which look as thoush they will have to be considerably reduced in price if they are to be disposed of within a reasonable time. Matters are also complicated pretty considerably by merchants being required to reduce their overdrafts at comparatively short notice, i and this also It appears likely will necessitate lower prices being accepted for stocks on hand. In addition to these complications it is evident there, is a persistent demand on the part of the public for goods at cheaper prices than have been operating for some time. i. Mr. Justice Stringer: Are we going to get them? Mr. Pryor: I think they have got to get them. Even with' the bonus I venture to say this: We have got to have lessened prices. The public of this Dominion, apart from everything else, will demand it. and they have got the say. Mr. Justice Stringer: We can summon spirits from the vasty deep, but will they come?

Mr. Pryor: Sir, if any community decides not to purchase in the> quantities and at the prices that have been operating, then the merchant is at the mercy of the purchaser, and sooner or later the' prices have got to come down. Alto-, gether, with the prospect of lower prices having to be accepted for foods purchased at high cost on the> one hand; and Hw prospect of increased wages having to be paid on the other, the general trading community is in a most unenviable position. Even without the addition of any bonus, jhe&> traders liavo been compelled to 100 1; into the question of working costs more seriously than for some' considerable time past, with the result that there is considerable prospect that the less efficient worker and the one who is now hardly' worth the money he is being paid is in danger of losing his position. Nothing is surer than that if any bonus is imposed-considerable numbers of wholesale and retail trade employees will be dismissed, and the work will have to be carried on by the more efficient employees. '