The Value of High Wages

Sun (Auckland), Volume III, Issue 620, 23 March 1929, Page 8

The Value of High Wages

Effect on Production Costs

fHE real value of wages in any country can only be estimated by their purchasing power, and while “nominal wages in New Zealand have steadily risen from an index base of £IOO in 1914 to £l5B in 1926, “effective wages have never reached the 1914 standard. Their purchasing power has varied from £Bl to £97, compared with £IOO at that date. Consequently, the average wage-earner in New Zealand has been worse off since the war.

JN discussing the question of high. wages and their effect on the cost of production, there are many people, especially among the rural community, who have the idea that because the average rate of wages has risen by nearly 60 per cent, since 1014, the wage-earners must be much better off, and that the increased cost of living is largely due to the big rise in the cost of labour. Actually, the reverse is the case. Wages have

risen because the outbreak of war was followed by enormous increases in the cost of imported goods, and freights, while the cost of internal production was raised by the heavy taxation necessary for war purposes, and in very few cases has the cost of food, goods, rent, fuel, light, and so on shown any tendency to drop back to normal. To meet this increased cost of living, wages had to rise, but while primary producers and manufacturers, importers and distributors, had their “boom’* and “slump'” periods, the wage-earners’ standard has never

caught up to his pre-war purchasing power, and that is why any talk of cutting wages, or further lowering the workers’ standard of living, finds them up in arms, and ready for action at a time when industrial peace is essential for that Increased production of wealth which is the only sound basis for lasting prosperity. LIVING ON EXPORTS A country correspondent, writing from a farmer’s point of view', suggests we do not realise “that everyone in this country gets his or her living from its exports, which are practically all farm products.” But this view is very wide of the mark. The whole of our exports in the last census period varied from £32 14s 9d a head In 1922 to £32 0s 6d in 1926, and our Imports a head exceeded our exports over that period. On what. then, was the country living? Our exports in those five years totalled £23S,000,000; our Imports, £244,000.000 —a deficit of £6,0000,000. How, then, did our million-odd people live? Actually, our estimated wealth production for that period was £527,000,000 calculated on official returns only, and at wholesale prices. In the last census year, 1926, the total value of goods produced was £116,000,000, of which £45,000,000 was exported. The remaining £71,000,000 went into home consumption. During the five years under review, the value added by labour to raw materials In our factories was approximately £100,000,000. PROBLEMS FOR PRODUCERS

These figures dispel the illusion that everyone here liveg on our exports, and the ideas that we are all riding on the farmers’ back, or that the whole country is riding on the backs of our cows and sheep, are equally Illusory, although used freely as propaganda to set the country producer against the city industrialist. We certainly need a larger balance of exports over imports in order to pay our debts abroad and accumulate local wealth. But we cannot control export prices, and the simplest method of improving our balance of trade is not only to economise on imported luxuries, which we cannot produce, but even more resolutely to cut down and shut out the importing of goods which we can produce ourselves from our own materials, in our own industrial plants, and by our own workers. P.A.