WAGE-FIXING PRINCIPLES.

Manawatu Herald, Volume XLIX, Issue 3842, 8 September 1928, Page 1

WAGE-FIXING PRINCIPLES.

[Evening Post.]

Far-reaching principles are embodied in the wage-reduction agrecment by which the deadlock in the Manawatu flax-milling industry has been ended. A reduction of 10 per cent, on present award rates of wages is accepted by the workers, but with the proviso that the full rate shall be restored when the average value of flax reaches £27 10s per ton. This in itself embodies a new principle as affecting a big industry. The Arbitration Court foresaw the necessity for variation when it reserved to itself , under the Flaxmillers’ Employees’ Award last year, the right to “suspend, alter, amend, or vary any of the provisions of this award in view of possible alterations in the conditions affecting the industry.” A deadlock, arose, however, when the workers refused to accept any variation by way of wage-reduction. That deadlock has at last been ended by an agreement which accepts the reduction, but fixes a point at which the old rate shall be restored. The principle thus accepted is that wages shall rise or fall according to the value of the marketed product. If it were capable of general application, this principle might remove some of the objections of primary producers to wage-fixation; but iye doubt whether it can be widely applied. Where the product is seasonal the range of values cannot be determined beforehand, especially if the selling is spread over a comparatively short period—-as with wool —and where workers have no permanency of engagement to enable gains and losses to be set against each other. Further, it would require careful investigation to determine the fair share to be debited or credited to labour. This is not known exactly now, and the calculations of parties are apt to vary according to circumstances. An example of this was the outcry against the Arbitration Court’s award for freezingworkers, which the Court was able to show represented only a small charge upon the average stockowner. Even more important than the sliding-scale wage agreement is the clause which follows: — It is agreed that an investigation shall be made into the trading accounts and last year’s balancesheets by the Department of Industries and Commerce, and that the opinion regarding a sliding scale of wages shall be reviewed after the investigation has been completed. It is not exactly clear how far the investigation is to be carried; whether it is to cover the basis of capitalisation, and take account of reserve and renewal accounts, besides making allowance for an industry which operates to some extent on a wasting asset. Obviously the rules for such an investigation would have to be considered before the system could be generally applied. Some enterprises, for example, must pay heavily for their capital, because the risk factor is great. If such enterprises were limited in their payments, to shareholders to the rates which are reasonable for a stable, continuing business, it would be difficult to finance them. Then again, due allowance must be made for expense of management. Efficiency in organisation often depends upon the capacity of the directing minds, and it is to the advantage of labour as well as capital that this efficiency shall be assured. If the investigation of accounts enables information to be obtained upon such points as these, it should go far in convincing the workers of the good faith of employers in asking labour to bear part of the burden in times of difficulty. There still remains, however, one difficult point. Even in the same industry there may be great differences in results. One employer, by superior organisation and enterprise, may achieve success while his neighbour fails. It would not be fair to fix wages on the standard payable by the least capable employer. Neither, on the other hand, would it be polite to deprive the successful man of the reward won by his greater ability. The Arbitration Court for a long time declined Eo regard profits as setting the standard for wages. To some extent the flaxmill agreement accepts that standard; and it will be interesting to observe how it works out in practice.

The greatest point in the agreement, however, is the fact that the workers have accepted a measure of joint responsibility for the maintenance of industry, and the employers have responded by placing their cards on the table. It is upon such a basis that the partnership of capital and labour may be established in industrial peace. The aim of the Mond-Turner conferences in Great Britain has been to lay that basis of mutual confidence and trust. Becaxtse there is a

fair prospect of this aim being achieved, the movement has excited the enmity of the arcli-instigators of the class-war. Those who believe that the sun rises in Russia and sets without shining upon Britain will no doubt agree with the Comintern Congress, just concluded, that the greatest enemy of the workers is Mondism, or the industrial peace movement, and that all energy must be concentrated upon counteracting the efforts of the “Chemical King, Mond.” But those who have faith In the constructive capacity of labour in association with capital will see in this Russian condemnation a further reason for believing that industrial peace may be attained without the annihilation of one partner in industry.