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War Economy

Stabilised Wages

Stabilised Wages

The wages provisions in the new regulations superseded the 1940 wage regulations1 and provided for the stabilisation of rates of wages and remuneration at November 1942 levels. Only if prices moved 2 ½ per cent above their December 1942 level would this stabilisation of wages be varied. The keystone of the whole scheme was the special Wartime Prices Index which was to record price changes. It had been a masterpiece of compromise, narrow enough in its coverage of goods and services to make it capable of being kept steady by price control, subsidies and resistance to cost increases, but at the same time covering a sufficient range of consumer goods and services to be acceptable to the workers2 as a measure of their cost of living, and hence of the level at which it was equitable to stabilise the economy.

The powers of the Court of Arbitration to make general orders were now restricted, and it could make no such order until there was an initial movement of 2 ½ per cent in the Wartime Prices Index. Thereafter it could not make a further general order until there was a subsequent variation of 5 per cent in the Wartime Prices Index. Thus the Court now had only a restricted power to amend by a single pronouncement the rates of remuneration contained in all awards and industrial agreements. The power of the Court to amend individual awards was also severely restricted. Anomalies might arise, or new occupations have to be provided for, but in such cases the Court had to be guided by the existing stabilised levels of remuneration of other workers. The regulations3 provided that the Court in making or amending awards or apprenticeship orders, or in approving any industrial agreement, should restrict itself to the correction of anomalies, having regard to the general purpose of the regulations. The effect was that it could restore or preserve a proper relationship with other rates of remuneration, but could not take account of fluctuations in the cost of living. The cost of living was included under the conditions to be taken into account in those carefully prescribed circumstances where the Court was given power to make general orders. In short, the Court was prohibited from

1 That is, the Economic Stabilisation Emergency Regulations 1942 superseded the Rates of Wages Emergency Regulations 1940.

2 And to other groups.

3 Sections 38 and 39.

page 289 varying rates prescribed in awards and industrial agreements, except to adjust anomalies or to make a general adjustment where prices had changed by a given minimum percentage.

Under the new regulations, control over actual or ruling wage and salary rates was intended to be just as rigid as the control over award rates. The regulations even went so far as to provide that ‘In any case where the basic rate of remuneration exceeds the rate of remuneration that was actually paid as on the 15th day of November 1942, the Court of Arbitration, on application made by or on behalf of the Director, may in its discretion, having regard to the general purpose of these regulations, make an order reducing the basic rate of remuneration to a rate not less than the rate so paid as on the said 15th day of November, 1942.’1

Thus the rates of remuneration in November 1942 became the stabilised wage and salary rates, and were referred to as the basic rates. These basic rates were not to be exceeded without approval, and for this purpose Wages Commissioners were appointed. The Commissioners could approve increases only where there were additional duties or risks, where there were anomalies at the base date, or as a result of a subsequent decision of the Court.2

1 Section 32, 5. The Director was the Director of Stabilisation.

2 Appeals against the decisions of Wages Commissioners could be made to the Court of Arbitration.