DISSENTING OPINION

Otago Witness, Issue 4029, 2 June 1931, Page 23

DISSENTING OPINION

MR MONTEITH OPPOSES REDUCTION. Mr A. L. Monteith, workers’ representative on the court, in dissenting from the general order, says:— I dissent from this 10 per cent, reduction made from wage rates, overtime, and special payments under awards and industrial agreements. The court was supplied with a considerable amount of data. The present world depression, in my opinion, is caused by the maldistribution of national income. Increased

production has taken place, but increased production only becomes an advantage if it is reflected in a higher standard of living, which means a corresponding expanded market for goods supplied. Instead of this, wealth production has been absorbed by capital expenditure which was not justified, and the writing-up ot the value of existing capital. It ie interesting to note the change of the system about the year 1900. For the last century and a-quarter all man’s efforts have been put into increased production, and man’s success has been phenomenal; he has created a machinery age. But the social conscience in regard to the standard of living has not kept pace with his power to produce. To-day, as a result, we have millions of unemployed, we have overstocked markets, and idle plants. MAINTENANCE OF DEMAND It is essential to maintain increased consumption at the same ratio as production, otherwise a glut must result. Thus in the last century we have witnessed cycles of so-called overproduction,- in reality underconsumption. The cycles happened periodically, but at more frequent intervals, until to-day we see unemployment a permanent factor, and overstocked markets likewise. In the past nations after -wars have applied themselves to industry, and by greater output been able to meet the increased interest bill on their national debt. To-day, however, markets are restricted; in fact, all known markets are- fully supplied, all nations are pursuing a policy of supplying their own internal wants as far as possible, thereby cutting down imports and at the same time increasing exports. In addition the policy of getting back to tne gold standard has had the effect of cepi eciated goods and appreciated nionej’, so that ail efforts to pay increased money interest by increased production (goods depreciated) only adds to the overstocked market and results in falling price levels because the class that live wholly on incomes. derived from interest cannot materially aid consumption, as they Generally already have lived a full life. WAGES AND PRICES In a period when goods and land.are depreciating in value and money is appreciating incentive to purchase is depressed and purchasers live in the hope that price levels will be lower to-morrow, and only buy sufficient for urgent wants. Snowden, in his book “Wages and Prices,” deals with wages and prices, and states that from 1850 to 1900 the calculation of prices, based on an average wholesale cost of a large number of articles in common use, shows they were lover by 11.7 per cent., while wages increased by 77 per cent, over the same period. Since 1900 to 1914 prices increased by 16.5 per cent., and no corresponding increase in wages was made. He also mentions the gross increase in the amount of income between 1901 to 1914, £487,000,000 to £670,000,000. Here we see the change in the system about the end of the century.

Since the war we have witnessed wonderful -strides in machinery output, all of which has been capitalised. In New Zealand we have witnessed the same movement, wages increasing over and above prices till about 1905. Since 1914 to

1927-8 prices exceed wages. The wage base of the court was the Government Statistician’s July figure of 1000, and the court took all labourers’ rates contained in .awards or agreements made 12 months prior to that date and averaged them. The cost of living increased by 4 per cent, during that period, and it is fair to take the mean of the 12 months, which in effect shows that wages started with a handicap of 2 per cent, at the base. From 1914 to 1927, without including this 2 per cent., award rates never gave the 1914 standard of living, and it was only after 13 years that workers got back to the 1914 standard. It has to be remembered that New Zealand had a very prosperous time, but award rates did not reflect-that prosperity. The majority of the court may stress the table of award wages figure of 1660, with an increase of 50 per cent, in the all groups figure, but consideration of the 2 per cent, loss at the base, which is 3 per cent, now, and the figure is for male adults only, and the weighting was made inside the groups about 1927 and worked back to 1914. If the figure for females (who are coming into industry in larger numbers). an<[ the 3 per cent, were taken into consideration the figure would be considerably less, and show that since 1927-8 the worker has slightly exceeded the 1914 standard but because of price levels lately suddenly falling and wage rates slightly increasing, to-day the worker is in excess of 1914 by about 5 per cent., but he has a lot of leeway to make up. OVER-CAPITALISATION

The employers put in returns of industries to show that a very small return on nominal capital had been secured. Amongst these industries was the freezing industry. If ever the effect of overcapitalisation were apparent it is here. When the court had a former freezing workers’ dispute before it an investgation was made and the result placed before the court. In one instance nearly half a company’s capital had been sunk in new works some eight years ago, and the works only operated one season and have stood idle since.

Economists are to-day agreed that overcapitalisation of industry is one of the greatest factors in industrial trouble of our tme. Plants to-day are idle or working short time and this means that overhead costs cannot be reduced, but lessened output by working shorter time must mean inceased cost per unit of production. The worker suffers by short time employment, the farmer cannot get cheaper goods and the farmers’ market is restricted by reason of the smaller purchasing power of the worker. Again, Mr Fawcett, Government Farm Economist, states that every penny increase in the price of butter added £1,000,000 to land values in New Zealand. The statistical report on dairy production shows the cost of manufacture of butter at 2.57 d per lb. Of this, let me say, .84 is paid in wages and salaries, and further dividing this amount shows that managers and secretaries get .38d and workers get under the dairy workers’ award .46d per lb. It is clear that the great increase in land values, mortgages, and increased interest rates are the cause of the farmers’ position. They suffer because of over-capitalisation. It must be so because the cost of manufacture of butter

during recent years has decreased. Theii relief is to be secured from mortgages and interest. This will assist them to become again possessed of a real purchasing power, but we should not take from one needy class to give to another needy class, the former of which are not in anyway responsible for the position of the latter. THE GENERAL LABOURER The lot of the general labourer is certainly that of a needy person. If he secures full time employment he receives £4 0s Bd, but being on an hourly wage he suffers from broken time caused by wet weather and casual employment. In Australia various Arbitration Courts have computed this loss at from 10 to 20 per cent. The position of the wool market has been stressed. It has because the price of wool went out of the reach of a large number of consumers and a substitute was found. Also, the substitute, artificial silk became fashionable. Again, fashions of to-day reflect the economic position, and for many years less material was used in dress. Now Wool has cheapened and will be again within the reach of its former users it may regain its market, but it is clearly a case of depressed purchasing power and high price levels causing consumers to find a substitute and the wool producer who capitalised his land on high price levels suffers. i general labourer in the average- has been the base of wage rates in New Zealand and the budget of average household expenditure has been made up on the following basis:—Food, 34.13 per cent.; clothing, 13.89 per eent.; rent, 20 31 per cent; fuel and light, 5.22 per cent.; and miscellaneous expenditure, 26.45 per cent. On a 10 per cent, reduction he will have, roughly, the following amounts to spend:—hood, £1 4s-lid; clothing, 10s Id; rent, 14s lOd; fuel and light, 3s 9d; miscellaneous expenditure, 19s. It may happen that any one item may be exceeded and, of course, another item must be , r eauced. These figures are based on a lull week’s employment. The idea of the 10 to 20 per cent, given by some Arbitration Courts in Australia is to give the worker the full weekly rate; in other words, give some compensation for the casualness of the employment. This is an important difference in principle, and makes a great difference in the lot of the general labourer here and elsewhere. REDUCTION INEQUITABLE It is correct that the exports have dropped by £10,500,000 between March 31, 1930, and March 31, 1931, and hard times have made more casual the employment of workers generally’. The Legislature instructed the court to take the financial and economic position of industry into consideration, and it is clear that we are suffering, but I do not think it reasonable to fix a wage less than the 1914 standard nor such a wage that ignores the hardship cast on the worker of increased casual employment.