CAB129-36 — Page 596

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5.

It must also apply to increases payable under existing wages agreements which link wage movements with movements in the cost-of-living index. This particular class of case is one of special difficulty, as suspending these automatic wage increases involves, an agreement to vary existing wage agreements. Wage agreements of this character cover some 11⁄2 million workers in important and widespread industries such as building. If these wages are allowed to rise automatically if the cost of living should increase, whether by reason of the change in the value of sterling or for other reasons, it will be difficult, if not impossible, to hold to a suspension of wage increases over the rest of the wages field. Our sugges- tion is that the Government should request the representatives of the employers and workers concerned to agree to a temporary suspension of the operation of the agreements in the present period of difficulty, or at least to eliminate that part of any increase in the cost-of-living index due to devaluation.

6.

We think that the standstill should not include any general escape clause, but if there were pressure for something of the kind, an arrangement might be made for a review in the event of a substantial change in circumstances, but such review should not be linked with any specified rise in the cost-of- living index.

7.

We now examine how we can incorporate in a general standstill arrangements permitting consideration of proposals for wage increases for the lowest paid workers.

8.

In our view, the principles of the White Paper as elucidated in the Chancellor of the Exchequer's speech in the House of Commons on 12th February, 1948 (copy of an extract about low-paid workers annexed to this memorandum), should be strictly and strongly adhered to, with a fresh emphasis upon their urgent necessity to preserve the advantages and not to waste the sacrifices brought about by the alteration in exchange rates. The White Paper and the Chancellor's speech would allow increases to the lowest paid workers in exceptional circumstances, but the strict application of the principles of the White Paper which we now advocate would clearly imply that any increases permitted to such workers must not be made the ground for increases all up the line.

9.

This is, of course, a matter of the greatest diffi- culty as it at once brings in the question of the wage- differentials between unskilled, semi-skilled and skilled workers. Nevertheless we must insist that the present state of our economy does not permit of overall increases of wages throughout industries. The only legitimate case that can be made is that in which it is shown that the present wage does not provide a decent minimum standard for the family of the wage-earner.

10.

The greatest problem is how to distinguish such cases from others and where to draw the line. It was formerly suggested that a national minimum wage might be introduced or

This raises acknowledged up to which wages could be brought. questions of great complexity and moreover in addition to the great cost may set a standard for pensions, insurance payments, etc., which would prove ruinous. We must, however, find some means by which, while avoiding the establishment of a national minimum wage, we secure that for a period of time all demands

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we must arrange that such a limitation is introduced into all arbitral or other proceedings for wage increases.

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