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War Economy

Wages Break Away in 1945

Wages Break Away in 1945

For some sections of the workers, the action of Parliament in raising the pay of its members in December 1944 seems to have been the last straw. The following report on 15 January 1945 is typical of many from various parts of New Zealand about that time:1

‘A strong protest against the action of the Government and members of the Opposition in increasing their own wages while railway employees and other lower paid workers throughout the country are still waiting increase in their wage rates, was expressed in a resolution passed at a meeting of the Southland Branch of the Engine Drivers', Firemen, and Cleaners' Association today.

‘“Although the establishment of the Tribunal to investigate railwaymen's wages and conditions was authorised by the Prime Minister in February 1944 nearly twelve months have passed and there is still no decision, in spite of the fact that the Tribunal has been sitting periodically for more than four months,” concluded the resolution.’

Unrest was by no means confined to the Railways Department. There was, for example, growing dissatisfaction with wages in dairy factories. A 16 January report on the dairy factory dispute said:2

‘The centre of negotiations yesterday shifted from Hamilton to Palmerston North and then to Wellington. The discussions culminated in a broadcast statement last night from the Executive page 320 of the New Zealand Dairy Workers' Union urging the workers to continue work pending the conference with the Minister of Labour.

‘The threat of a strike in the industry first appeared before Christmas when the workers in some of the Waikato and North Auckland factories expressed dissatisfaction with the Dairy Factories Award made by the Arbitration Court.’

The report continued:

‘In Hamilton on Friday night, over one hundred dairy factory workers of the Waikato debated the issue for over four hours. The meeting resolved to take direct action, by going on strike, unless a minimum basic wage of £5 10s., a modification of the existing stabilisation order, and a repeal of the second schedule relating to overtime rates were granted; the time limit to be five o'clock last evening.’

Strike action indeed resulted, and on 17 January newspaper reports said:1

‘The strike of dairy factory workers is not general. Workers at eleven factories owned by the New Zealand Cooperative Dairy Company, including two powdered milk factories and one or two independent factories, were on strike in the Waikato yesterday. Several factories at Cambridge joined in today….

‘Arrangements have been made to man the striking factories with volunteer labour, including military labour. All the dairy factories in North Auckland are working pending a conference on Thursday.’

The following day waterside workers were threatening direct action, in protest at the use of ‘free’ labour to produce butter.2

On 19 January a basis was found for resumption of work in dairy factories, subject to negotiation of the dispute at a conference of workers and employers organisations; but at midnight of the same day West Coast railway servants went on strike in protest over delay in the Railways Tribunal's wage decision. Three days later Auckland railway servants decided to strike for the same reason.

These strikes did not last long, but they had their effect. On 13 February the Arbitration Court was given power to adjust general disparities in wage levels. Two days later the Railways Tribunal granted a 3 ½d. per hour increase back-dated to 30 June 1944.

The new regulations for the Arbitration Court meant the end of the more rigid period of economic stabilisation. Stabilisation was to continue, but in a modified form. The Prime Minister's announcement of the change is worth recording at some length.3

2 Ibid., 18 January 1945.

3 Ibid., 13 February 1945.

page 321

‘Amendment of the Stabilisation Regulations to enable the Arbitration Court to adjust general disparities in wage levels was announced by the Prime Minister (Mr Fraser) today.

‘“In their original form the Stabilisation Regulations limited the power of the Arbitration Court in dealing with wages; there being a general barrier against increase except on the ground of strictly-defined anomalies. Since then a number of amendments to the Regulations have made possible the adjustment of wages in a variety of additional circumstances. The most recent of these amendments, No. 4, of June last year, reduced the limitations on the Court's powers in the main to a requirement that the Court should have regard to the economic stability of New Zealand.

‘“During the last two years, in the adjustment of our economy to the constantly changing stresses of war, some classes of workers have received increases in wages, others have not. So there has arisen a disturbance of the general equilibrium within the wage structure tending to produce a sense of unfairness and dissatisfaction. Such a lack of balance is contrary to the intention of stabilisation, which has always involved keeping a proper balance between the various classes of workers and a proper relationship between wages and living costs.

‘“The Stabilisation Regulations are accordingly being amended to enable the Court, in dealing with wages, and incidental to giving consideration to the economic stability of New Zealand, to take into account the disparities which have arisen within the wages structure through some groups receiving increases while others have not received them. The Court is given power to amend existing awards and agreements so as to restore the balance between the different classes of workers. So that it may achieve this, the amendment requires the Court to take into account ‘the desirability of so fixing rates of remuneration as to restore or preserve a proper relationship with the rates of remuneration of other workers or classes of workers.’ The regulations also provide for amendment of the wages portions of the awards, apprenticeship orders, and industrial agreements during their currency.

‘“Provision is made empowering the Court to issue pronouncements specifying the standard wages for skilled, semi-skilled, and unskilled workers. The Court may exercise this power of its own accord or on application being made to it by any organisation of workers or employers. This will enable the Court for its own purposes, and as a guide to other parties when they come before it on wage matters, to lay down principles, rather than to leave these principles to be deduced from awards as they are issued. Such pronouncements by the Court will also serve as a useful guide in other negotiations on wages.

page 322

‘“Unions are thus enabled to apply to the Arbitration Court for a review of the wages portions of awards, even during their currency, on the grounds of disparity with other workers, using any standard wage pronouncement as a guide. Workers who do not come under the Arbitration Court will be able, as in the past, to apply for adjustment of wages through the Wages Commissioners, to whom applications are made jointly by employee and employer. The Wages Commissioners are empowered to approve wage increases on the grounds of removing disparities. In doing so they are enabled to take into consideration any standard wage pronouncement which may be made by the Court.

‘“It is also necessary to consider the position of the farmers. I am not unmindful that these adjustments in the wages structure may affect the position of the primary industries. This is a matter which will have to be very carefully studied and dealt with in the light of the general undertakings given to the primary industries at the time the original stabilisation policy was announced. Needless to say, in any action which is taken, full consideration will be given to the views of the representatives of the industries concerned.

‘“The announcement of these changes does not in any circumstances mean that the inflationary danger is over. It was sufficiently demonstrated in all countries in 1914–18 and later that the greatest inflationary danger develops in the immediate post-war period. We must be prepared to meet that situation again—a situation in which stabilisation will continue to be our most sure defence on the economic front. Our prosperity in New Zealand is so largely dependent on the sale of our produce overseas that the success of stabilisation is vitally important to our primary industries. How successful we are with stabilisation will widely affect our ability to deal with the difficult problems of the export market.

‘“Beyond all this there is a further reason why stabilisation must have the continued support of all New Zealanders. The Government, together with the people of New Zealand, is determined that the men returning from the Forces, when re-establishing themselves in civil life, shall not have to do so under conditions of economic disruption. Stabilisation is their protection against these conditions.”’

On 17 March 1945 the Arbitration Court made a standard wage pronouncement, increasing standard rates by 3 ½d. an hour. Primarily this was a recognition by the Court of the fact that about a quarter of all wage earners were to benefit from recently announced decisions of other tribunals, and that a new standard was necessary page 323 to form a basis for consideration of individual applications for wage adjustments.1

Reviews of awards to adjust disparities resulted in increases in individual awards of up to 3 3/4d. an hour. In the state services, a general increase in wages, approximately equivalent to the 3 ½d. per hour increases granted by the Railways Tribunal in February 1945, was announced, back-dating to June 1944.

It was wages rather than prices which made the first major breakaway from the rigid stabilisation programme. The stabilisation programme depended above all on equality of sacrifice or equality of restraint in demanding higher incomes. The end of wage stability came from a sense of unfairness when some sections got increases, rather than from any breakaway of prices raising the cost of living.

In December 1945 a new Minimum Wage Act was passed setting increased minimum rates applicable to all adult workers from 1 April 1946.

1 The pronouncement referred also to a ‘noticeable tendency in the last few months for employers to agree to increased rates in Conciliation Council or in negotiations for special agreements.’ Again, it said, ‘The relative position of certain limited groups of workers has been appreciably improved in the past two years, possibly in some cases as a result of the adoption of militant tactics.’