WAGE INCREASES

Wairarapa Times-Age, 16 December 1940, Page 3

WAGE INCREASES

EFFECT IN WAR TIME STANDARDS OF LIVING MUST SUFFER. AUSTRALIAN ECONOMIST’S EVIDENCE. To maintain standards of living under war conditions was “physically impossible’’ and to raise wages would be a “pursuit of a mirage,” Mr William Kennedy McConnell, of Sydney, consulting economist, claimed at the basic wage inquiry before the Full Arbitration Court in. Melbourne recently. Chief witness for the employers, Mr McConnell said: “Some temporary reduction in material standards? is the least price which the community must pay for safety and security.” Any upward movement in the basic wage would disturb the Government's system of wartime control, and apart from endangering the war economy would make the ultimate transfer to a peace economy more difficult and unnecessarily painful. It was wrong to assume 'that under existing conditions a rise in national income was a fair index of increasing prop.ei-ity, because any increased income now was in the form of arms, munitions, and other means of waging war. ,

Present industrial expansion was due mainly to development of war industries and services. It added nothing to the standard of living. In fact, this development could continue only if some part of existing standards was abandoned. As the war intensified, its inroads into peacetime activities must inevitably be such that lower-salaried as well as higher-salaried groups must share in sacrifices. The bulk of the national income went into the pockets of wage and salary earners, and the bulk of the national production went to maintain their living standards. Therefore the resources required for waging war could not be obtained from sacrifices of higher income groups alone. Lower-paid workers must also release resources by accepting reductions in living standards.

Mr McConnell declared that the community must reconcile itself to a reduction of its living standard to the degree that imports were cut off. As soon as imports were cut people would try to transfer their spending to local-ly-made goods, but home production could not expand sufficiently to meet this increased demand because labour and resources were needed for the war effort.

If the basic wage were raised the Prices Commissioner would have to allow increases in prices to compensate for higher costs, and the “vicious spiral of inflation” would set in.