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settlement by the strike or lockout. Further, the existence of machinery for arbitration " saves the faces " of the leaders of the disputants, and enables them to arrive at a solution without loss of dignity, while " the power to invoke legal sanctions may strengthen the hands of the leaders of either organization against their discontented followers."(1) Such arbitration may be either voluntary or compulsory ; but in a country such as New Zealand, in which very many of the workers are in small scattered groups, difficult to organize, and on the whole much weaker in bargaining power than employers, compulsion is necessary if the system is to function effectively. (d) The Court and the Advocate.—The statement that the arbitration system is responsible for " the emergence of a type of industrial advocate to whom the representation of interests is delegated," need not be taken seriously as an objection against compulsory arbitration. The delegation of such authority to specialists is regarded as necessary to all forms of collective bargaining, and is not peculiar to a system of compulsory arbitration. Indeed, my opinion, formed after a three years' stay in England, is that the prob'em raised by the so-called industrial advocate, is, if anything, greater in the United Kingdom than in this country. I have very little doubt that industrial conflict in the United Kingdom has been intensified by the personal pride of representatives on both sides, who having taken a definite stand, preferred to maintain it at the risk of industrial conflict rather than recede. The recent position in the coal industry is, I believe, a case in point. The Arbitration Court does provide an excuse for receding from an untenable position without loss of personal dignity or prestige. ■3. Standardization of Wages and Lack of Incentive. It is further argued that " the minimum wage tends to become the standard wage, and the efficient worker is usually degraded to the level of pay of the inefficient. Consequently the powerful incentive to efficiency provided by differential rates of wages dependent on variations in ability and skill has been removed, and the tendency has been to reduce effort, skill, and efficiency to a mediocre level, The cumulative effects of this tendency over the period of more than thirty years during which the system has been in operation have not been adequately measured, but what evidence there is points to the conclusion that in some occupations at least they have been considerable."(2) Statements of this sort are matters of opinion. As such they must not be ignored, of course, but must be placed in a different category from actual evidence. (a) Incentives and Variations in Wage Rates under Arbitration.—lt is probably true that there is a tendency for wages to approximate to the minimum during a period of depression ; but to suggest that this tendency has been of general application over the past thirty years —which is implied in the statement quoted —is, I think, wide of the mark. The following quotation from Professor Pigou, an eminent authority, is decidedly relevant: " The Inspector of Factories in Victoria in 1902 stated that in the clothing trade, where the minimum for men and women workers respectively were 455. and 205., the average wages were 535. 6d. aiid 225. 3d. Furthermore, in the report of the Bureau of Labour for 1909, it is stated that " out of 2,451 employees iu factories in Auckland City, excluding under-rate workers and young persons, 919 received the minimum rate and 1,504, or 61 per cent, of the whole, received more than the minimum. In Wellington the percentage receiving more than the minimum was 57, Christchurch 47, and in Duuedin 46." The same point- is illustrated in a rough way by the policy of certain American unions which enter into agreements with employers concerning both a standard and a minimum, wage. (Economics of Welfare, pp. 431-32.) " Even when extra efficiency is not rewarded by any addition to the wage rate, it may be rewarded by selection for continued employment in bad times, and in businesses where, as in railway service, there are a number of grades of employees receiving different rates of pay, for promotion when opportunity offers." (Op. cit., p. 433.) It would appear that in normal times there is, in fact, a sufficient variation in wage-rates over a wide range of industries to provide some incentive for additional effort. Possibilities of promotion operate in the same direction. In times of depression the fear of unemployment may he expected to prove sufficiently efficacious as a goad to effort. It should be noted that the opinion quoted at the beginning of this section implies that the tendency to uniform wage rates lias been operative throughout a period of thirty years. This is not in keeping with the evidence quoted from Professor Pigou ; nor does it fit in with such information as I have been able to collect relating to more recent years. I am informed that until recently wages in the carpentering and furniture trades were definitely above the award rates for the majority of workers. I believe this would apply to a very large number of industries. (b) The Limits and Social Implication of Wages Variation without the Court. — The implication of the statement quoted surely is that variation in wage rates would be increased if compulsory arbitration were abolished. I agree that this is likely, but in a wholly undesirable manner. If the system of compulsory arbitration were abolished, there would be two opposite reactions on trade unionism. Certain unions iu which the employees are concentrated in fairly large groups would be strengthened. Others, where the workers are scattered, or where the employees are mainly women, would be seriously weakened, and possibly would disappear. In the former case, the unions would certainly adopt the policy of the " common rule" and would enforce minimum standards of wages and conditions of work as in the case of the American unions referred to by Professor Pigou. Under such conditions it is unlikely that there would be less uniformity than at present .and nothing would be achieved from the point of view of wage variation. In the latter

(1) Pigou, " Economics of Welfare," p. 393. (2) Canterbury Chamber of Commerce Bulletin No. 30.

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