Hokitika Guardian & Evening Star THURSDAY, DEC. 23rd, 1920. LOWERING WAGES.

Hokitika Guardian, 23 December 1920, Page 2

Hokitika Guardian & Evening Star THURSDAY, DEC. 23rd, 1920. LOWERING WAGES.

In America it has been found necessary as a means.to create more employment to reduce wages, which owing to inflation had acted adversely on the cost of production, and made buying too dear —with a consequent falling off in demand and consumption. Britain is face to face with a somewhat similar situation. Apart from the unemployment caused by high wages increasing the cost of production, there is also the unemployment of the ex-servicemen who demobilised, have been unable to secure employment. The rules of some of the Labor Unions have been a barrier in the latter cases, particularly in respect to the building trade, for which naturally trades men continue in demand. The Government is trying to deal with this matter in a special way, and a special guarantee against unem-' ployment is being offered to the Unions which will absorb at least 50,000 of the ex-servicemen. This,. however, does not cover the whole industrial situation, the salvation of whieh lies, according to the President- of the Fede-

ration of British Industries in reducing wages. Dealing with the problem as it now presents itself he remarks that ,- the trouble commenced with increased cost of production during the war period, when wages rose owing to scarcity of labour and Government action, at the same time that Government subsidies artificially reduced the cost of living. The effect of this was masked during the war by the fact that industry was largely working for the Government, and foreign competition was practically non-existent. At the same time, however, the Government was financing the war partly by taxation and loaiis, which depleted the only sources from which capital could be renewed, and paVtly by inflation of credit and currency, which depreciated the purchasing power of the money unit and increased the prices of all but the subsidised commodities. Immediately after the war inflation continued, and the abnormal demand of a starving world for commodities kept prices up and trade active. Now fo-

reign competition is reviving, tlie sub- | sidies are disappearing and the Government is attempting to reduce the inflation while still maintaining its high rate of expenditure and high taxation At the same time, Labour, accustomed to a scale of living rendered possible by the artificial war conditions, and having achieved shorter hours, expects to maintain these advantages. Industry is therefore faced with a shortage of capital, labour costs at least as high as during the war period, and the competition of countries with lower labour costs, and in most cases lower taxation, in markets which will no longer pay the abnormally inflated prices. It is the beginning of the recovery of foreign manufactures with a lower scale of costs and lower standard of living that has cut short this ahnormal period of British trade. Our only prospect of holding our own is to increase production, with lower production costs, and curtailment of the spending power of the general public while supplies are still limited.” As the whole of the industries are legally hound to a maximum forty-seven hour week, there is no afvenue for increased production. “The trade of the country,” the President adds, “cannot be maintained if the present false relations are fostered. As a nation we are considerably poorer than in 1914, hut the standard of living of the working classes has mounted very considerably; their spending lias increased, while the productivity has declined. As a nation, for many years wo have lived beyond our income and are paying current expenses by resorting to moneylenders. The only way we can replace our exhausted capital or even avoid defaulting on the immense interest payments due, is by working our resources to their maximum capacity, and as regards the population generally by cutting our coat to the cloth wo have—by lowering our standard of living and our spending. But now—when the Government is abandoning Subsidies and restricting

credit—Labour is even still pressing for further increase in money wages.” Tli 0 plight of Great Britain is typical of the general industrial situation, anti a reordering of wages’ conditions must come inevitably. ‘‘The vicious circle” cannot operate adversely much longer, and it must begin to unwind itself before long.