COST OF LIVING

Waikato Times, Volume 122, Issue 20504, 21 May 1938, Page 8

COST OF LIVING

WAGES AND PRICES I POBITION OF WORKERS REPLY TO MINISTER "We cannot let pass the claim mad# by the Minister of Finance (the Hon. \V. Nash) in his latest public addreaa, that the statement that the Increased income of the workers %a§ been absorbed by increased prices ‘is not true,' ” says a statement by the Associated Chambers of Commerce of New Zealand. "The Minister, in support of his claim, say-s the latest official statistics available to him show that wage rates have increased by 23.3 per cent since 1935, and retail prices by 12.5 per cent. To those persons unversed In the subject of wage-rate and cost of living statistics, it might appear, on this statement, as if there i-s a net gain to wage-earners of 10.8 per cent, but, as the Minister of industries and Commerce has pointed out previously, ‘there appears to be a considerable amount of misunderstanding in the minds of a certain section of the public as to the relationship between increased prices and increased purchasing power.’ The Government Year Book (page 762) plainly sets out how such figures as the Minister of Finance has given have to be submitted to a further piece of arithmetic in order to arrive at the 'real’ value, or purchasing power, of money wages, because the latter can buy fewer living necessaries owing to the higher prices of to-day. Therefore, the Minister of Finance stated only half thß case. Present Wage-rate# “In calculating the purchasing power of present-day wage-rates, in accordance with the method set out in the Year Book, it is necessary, in order to arrive at the position of the great majority of industrial male wage-earn-ers, first to exclude the farm-work-ers’ group. The reason for this Is that the money w’age-rates now being paid to farm workers have been increased -since 1935 by 56.7 per cent—an inorease very much greater than has been made in the wage-rates of any other of the remaining Industrial workers. Therefore, unless the farm workers are left out of the calculations, all the other Industrial wage- 4 earners would be 6howm (on a combined groups basis) as having had a greater increase in their wage-rates than, in actual fact, they have had. “The Minister of Finance had not excluded farm workers from the figures w r hen he said that "wage rates have increased since 1935 by 23.3 per cent.” The fact Is that all those workers covered by the Minister's figures have not had among them (farm workers excluded) an increase in their money wage-rates of 23.3 per cent, so that their purchasing power is not as great as would appear. The correct position, on the basis of index numbers, Is approximately as follows: “Purchasing power (approx.) adult male wage-earners (farm workers excluded). Base for index numbers, 1926-30: 1000. 1981 1049 1932 1084 1933 1109 1934 1095 1935 1080 1936 1105 1937 (December) 1087 “These figures show that although industry has been loaded with the extra costs represented by the increases made in money wage-rates, all that hag accrued to the full-time workers concerned has been the negligible increase in their purchasing power of approximately .6 per cent over 1935* The figures show further that purchasing power, far from being greater to-day than in previous years, was actually greater in 1933 by 2.02 per cent, in 1934 by .73 per cent, and In 1936 by 1.65 per cent. The Other Factors “While wage increases themselves bring about increases in the cost of living, It Is not the case, of course, that workers would be better ofT today if their wages had not been increased, because of other factors in the growth in the cost of living, namely (1) the cost of introducing the •shorter working week, (2) those normal increases in the prices of goods which have come about not as the result of any action by the Government, and (3) the heavier rates off taxation which are now operating. All these things cannot hope to march together without the cost of living rising at the same time and cancelling out purchasing power. Something has to go, and if existing wage levels and the shorter working week are to be maintained, then rates of taxation on industry and business must be brought down. Taxation being to no small extent written into the cost of living, reduced rates of taxation on business enterprise would in effect give a greater purchasing power to existing wage-rates.