FOURTH QUESTION.

My own opinion is that the fixing of a standard wage increases efficiency generally, from the fact that the employer demands in return a standard degree of efficiency. It is true that some of the unions have endeavored to restrict the output, and have in some cases gone so far as to strike for the purpose of enforcing their demands. They have invariably failed. At the same time there is some evidence that in certain of the trades—and in that connection the agricultural implement making trade might be mentionedthey have succeeded to some extent in lessening the output. For that reason there is a large section of employers in this State who believe that the only fair way of regulating wages is by piecework. Our wages boards have power either to fix piecework rates or to give the employer that privilege with the provision that the piecework rates fixed by him shall be such as will enable an average worker to earn at least the minimum wage. One strike is on record against the fixing of piecework rates by the employer. The molders at the Sunshine Harvester Works objected to piecework rates in any form, although in fact the men were earning considerably over the minimum, and in some cases twice as much. Yet the union took their men out for the simple reason that they objected to piecework being paid under any circumstances, and the men have been out now some five or six weeks. It is only a sectional strike, and probably not more than 20 or 30 men are affected. To answer your question generally, I think it can be truthfully said that the efficiency of the workers all-round is distinctly higher under the minimum wage than it was before.

I may say, in conclusion, that the minimum-wage law in Victoria is working very smoothly. There are fewer strikes in this State under the wages-boards provision than in the neighboring State of New South Wales, where they have an arbitration court. For the last 3 months, out of the 49 strikes that occurred in the 6 States of Australia, 38 were in New South Wales. Our wages-board law takes no cognizance of a strike once it occurs, but leaves the parties to fight it out amongst themselves. In New South Wales they have elaborate provisions for settling strikes that occur, with the above result. We believe that the best way of settling strikes is to provide as we do in Victoria-every means of arriving at fair conditions between master and man, and of revising those conditions as occasion demands, and then washing our hands of the whole matter.

Prof. M. B. Hammond spent the winter of 1911-12 in Australia and New Zealand studying the operation of the wage board and arbitration legislation, and has summarized his conclusions in the following statement:1

In conclusion, I wish to sum up as briefly as possible the results which it seems to me have been attained in Victoria and, so far as their experience extends, in the other Australian States, under the wages-boards system. Perhaps I may be allowed to say that I have reached these conclusions after a thorough study of the reports

1 Third report of the New York State Factory Investigating Commission. Appendix III. Minimum wage legislation, by Prof. M. B. Hammond, pp. 222-228. See also Prof. Hammond's articles referred to in the bibliography at the end of this Bulletin. They are of special importance as giving the results of the most recent first-hand study of a thoroughgoing character.

and records of the departments concerned in the administration of the acts, after attendance on many board meetings, and after interviewing many people, Government officials, chairmen of wages boards, employers, trade-union officials, social reformers, and politicians who have had much to do with wage-board legislation and administration. 1. We may say without hesitation, I think, that sweating no longer exists, unless perhaps in isolated instances, in Melbourne or in other industrial centers of Victoria. This is the opinion expressed to me not only by the officials in the factory inspector's office, including the women inspectors, but also by Mr. Samuel Mauger, the secretary of the Anti-Sweating League, who is constantly on the alert to detect any evidence of sweating and to ask for the appointment of a board in any trade in which it is thought to exist. In the board meetings the efforts of the labor representatives are nowadays seldom directed toward securing subsistence wages, but they aim rather to secure a standard rate of pay based on the needs of the average worker and as much above this as is possible.

2. Industries have not been paralyzed nor driven from the State, as was freely predicted by extreme opponents of the wages-boards plan. There is one instance of a plant having left Victoria on this

account.

A brush manufacturer from England, who had recently come to Victoria to establish his business, was so enraged at the idea that the wages he was to pay were to be regulated by law that he moved across Bass Strait to Tasmania. That is the only instance of the kind to be found in the records. On the other hand, there has been a steady growth of manufactures. In 1896, when the factories act, containing the wages-board provisions, was passed, there were in Victoria 3,370 factories; in 1910 there were 5,362. In 1896, the number of workers in factories was 40,814; in 1910 it was 83,053.1 This, I think, indicates as great a growth in manufacturing industry as most countries are able to show.

3. In spite of the fact that the law in Victoria does not forbid strikes, as is the case under compulsory arbitration, it would be hard to find a community in which strikes are so infrequent as they are in Victoria. There are, I think, not more than half a dozen cases in which a strike has occurred in a trade where the wages and hours were fixed by a wages board. The only serious strike of this sort was in a trade where the court of industrial appeals had lowered the wages fixed by the wages board after these wages had been paid for some weeks. I may add at this point the statement that there are very few cases of appeals from a wages-board determination in Victoria, though there seem to be more in South Australia.

4. In spite of the fact that the meetings of the boards are at times the scenes of outbreaks of passion, and angry and insulting words pass back and forth across the table, there can be little doubt but that the representatives of both parties go away from these meetings with an understanding of the problems and difficulties which the other side has to meet, which is usually lacking in trades where collective bargaining is not resorted to. This was repeatedly brought to my attention both in and out of board meetings by men who had taken part in these discussions. It probably goes far toward explaining the infrequency of strikes and lockouts.

1 By 1913 these numbers had increased to 8,089 factories with 110,487 employees.

5. That the minimum wage fixed by the board tends to become the maximum in that trade is often asserted, but it would not be easy to prove. Employers have frequently said to me that they believed there was a tendency in that direction, but they have seldom been able to furnish evidence to that effect from their own establishments. At times I have found on inquiry that not a single man in their own plants was receiving the minimum wage. The employers' opinions seem to be more the result of a priori reasoning than the results of actual experience. Nor, on reflection, is it easy to see why the minimum should become the maximum. The determinations do not compel an employer to hire or to retain in employment any worker. He is free to dismiss any man whom he believes incapable of earning the minimum wage, or he can send the employee to the chief factory inspector for a permit to work at less than the minimum fixed by the board. There seems to be no reason why under this system there should not be the same competition among employers as under the old system to secure the most efficient and highly skilled workmen, and there is no reason why such men should not get wages based on their superior efficiency. Victorian statistics on this point are lacking, but in New Zealand, where minimum wages are fixed by the arbitration court, statistics as to wages tabulated in 1909 by the Labor Department, showed that in the four leading industrial centers of the Dominion the percentage of workers in trades where a legal minimum wage was fixed who received more than the minimum varied from 51 per cent in Dunedin to 61 per cent in Auckland.1 There is no reason to think that a dissimilar situation would be revealed by a statistical investigation in Victoria.

6. Although the legal minimum wage does unquestionably force out of employment sooner than would otherwise be the case a certain number of old, infirm, and naturally slow workers, it is easy to exaggerate the working of the minimum wage in this respect. The opinions of employers differ in regard to this point. Workers who feel that they can not earn the minimum wage may apply to the chief factory inspector for a permit to work at a less rate than the minimum, and the officials who have charge of this matter feel pretty certain that in this way practically all cases really needing relief are cared for. The percentage of men with permits is, however, not high, and possibly there are some who are forced out of work who do not apply for a permit.

7. There is also much difference of opinion as to whether or not the increased wages have been to any considerable extent counterbalanced by an increase of prices due to the increased wages. The probability is that in some occupations higher wages have in this way been passed on to the consumers, the laboring classes included. This would be especially true of industries purely local where there was little opportunity to use machinery.

In Melbourne, following close upon a wage-board determination which raised the wages of waiters and cooks in hotels and restaurants, the cheap restaurants which had been furnishing meals at 6d. (12 cents) by a concerted movement doubled their prices. While the increase of wages in this case was doubtless in part responsible for this increase of prices, in the main the wage increase was the occasion

1 See pages 170 to 172.

rather than the cause of the increase in prices, which was bound to come sooner or later because of the increase in cost of food supplies. The New Zealand commission on the cost of living, which has recently published its report, carefully considered this question as to the effect of labor legislation on the cost of living and concluded that in the case of staple products whose prices were fixed in the world's markets, the local legislation could have had no effect on prices. In other trades, the increased labor costs had served to stimulate the introduction of machinery and labor-saving devices; in still other trades it had apparently not increased efficiency, and accordingly labor costs had increased. This seems to have been the case in coal mining. Generally speaking, the evidence in most trades was not sufficiently definite to show whether or not there has been an increase or a decrease in efficiency due to labor legislation. This is about what we must conclude as a result of the conflicting testimony on this point in Australia as well as in New Zealand. I found that most employers with whom I talked were certain that laborers were less efficient than in former years. Generally they could not explain very satisfactorily how this was due to legislation, and their arguments usually reduced themselves to the assertion that the tradeunions were preaching and their members were practicing the doctrine of "go easy," and were in this way restricting the output. Trade-union officials, on the other hand, were just as emphatic in their declaration that such a matter had never been discussed in their meetings. I do not believe that in this respect conditions in Australia differ from what they are in America, and I find that the same assertions are made here by employers as to the effect of trade-unions and that these statements are as vigorously denied by the union officials. Only to the extent, therefore, that compulsory arbitration and wage boards tend to develop and strengthen unionism, which they undoubtedly do, can we find that the legal minimum wage exerts any appreciable effect on the decline of efficiency and the restriction of output. This must remain, therefore, a mooted point.

8. Finally, whatever may be the difference of opinion between employers and employees as to the effect of the legal minimum wage in Victoria in producing certain results, and whatever criticisms they may make of the administration of the factories act, both sides are now practically unanimous in saying that they have no desire to return to the old system of unrestricted competition in the purchase of labor. I did not find an employer who expressed a desire to see the wages boards abolished. Generally speaking, employers are just now holding tightly to this plan, partly no doubt as a means of saving themselves from an extension of the operations of the Commonwealth arbitration act. In the main, however, they have been convinced that the minimum wage has not been detrimental to their businesses and that it has forced their rivals to adopt the same scale of wages as they are themselves obliged to pay. I have mentioned the fact that the Victorian Chamber of Manufactures led the attack on the wage-board system when the Government was providing for its extension in 1900. Last April (1912) the president and secretary of that organization and the president and secretary of the Victorian Employers' Association told me that in spite of the defective administration of the wages-boards act their members had no longer any

desire to have the system abolished. The trade-union secretaries also complain of the administration of the act, particularly that the chief factory inspector does not take a more drastic attitude in regard to the prosecution of the violators of the act whom they have reported. This fact that both sides complain of the administration of the act is a pretty fair indication that the administrative officials are doing their work in a conscientious manner without prejudice or favor. . The trade-unionists generally admit that labor has been greatly benefited by the wages-boards legislation, and they do not desire a repeal of these laws, but many of them in Victoria are inclined to think that compulsory arbitration would give them even more. The wages boards deal only with wages, hours, payment for overtime, and the number and proportion of apprentices. The arbitration courts, on the other hand, may and sometimes do give preference to unionists and are often called upon to decide many minor matters which can not be considered by wages boards. Furthermore, wages boards established by any one State are bound to consider interstate competition when they fix wages. The Commonwealth arbitration court, on the other hand, can regulate wages throughout Australia in the industrial field within which it operates. Hostility to the minimum wage in Australia may therefore be said to have practically died out, and the question most discussed to-day is whether this minimum wage shall be secured by means of wages boards or through the machinery of a Federal arbitration court.

NEW SOUTH WALES.1

HISTORY OF LEGISLATION FOR FIXING WAGES.

In the industrial arbitration act, 1901, the principal innovation lay in the extension of the definition of industrial disputes, so as to include consideration of conditions prevailing in industries in which no dispute existed technically. Under the act of 1908, which represents the third stage in the development of an industrial code, a social ideal was definitely evolved that every normal individual is entitled to a reasonable standard of comfort consistent with the welfare of the community.

All awards, orders, and directions of the court of arbitration, and all industrial agreements current and in force at the commencement of the act, remained binding on the parties, and on the employers and employees concerned, for the period fixed by the court, or by the award, or agreement, or where no period was fixed, for one year from July 1, 1908. Any industrial agreement might be rescinded or varied in writing by the parties, any such variation, if filed with registrar, to be binding as part of the agreement.

Provision was made for the registration of trade, as industrial unions, and the expiration of the industrial arbitration act, 1901, did not affect the incorporation of industrial unions registered under that act, while any trade-union registered under the act might make a written agreement with an employer relating to any industrial matter. The industrial court consisted of a judge, sitting with assessors, when necessary.

1 This section to page 142 is from the Official Year Book of New South Wales, 1913, p. 910 et seq.