Fair pay agreements: Is the sky set to fall?

Before the election, Labour’s proposed Fair Pay Agreements were painted by critics as a return to the days of industrial strife and strikes. With a Jim Bolger-led working group convened to flesh out the details, Shane Cowlishaw explores whether it will really plunge the country into darkness.

A working group to plot the future of industrial relations in New Zealand has been formed, with the Government making a left-field choice to lead the work in an attempt to take some sting out of attacks by the policy's critics.

In a surprising move, former Prime Minister and National MP Jim Bolger was unveiled as the chair of a group that will look at how to implement Fair Pay Agreements.

Announced as a pre-election policy by former Labour leader Andrew Little, they will essentially be industry-wide agreements that can be triggered when a certain level of support is reached.

They will set minimum terms and conditions, including pay rates, which will apply across an industry and include non-union workers.

Bolger, along with Ruth Richardson and Bill Birch, led the creation of the Employment Contracts Act in 1991.

Its introduction made union membership voluntary and did away with the National Awards system, the basis for many aspects of the newly-announced agreements.

“We’re pleased to be part of the solution, we’re pleased to be around the table because if we don’t put our concerns there we can’t stand on the outside and sort of lob hand grenades in.”

Bolger, who recently told RNZ in an interview that he believed unions should be strengthened, is a savvy appointment by the Government as it looks to deflect some criticism from the business community.

Addressing media from a podium he used to frequent as Prime Minister, Bolger, who is also a former Minister of Labour, said there were serious problems within wealth distribution that needed to be addressed.

“What I think we have in many instances failed to achieve - acknowledging the success of many policies including, importantly, globalisation - is what about those that miss out?”

He declined to comment on issues including the minimum wage and fought back against suggestions the agreements were a return to the past.

“We’re not going to be looking backwards, we’re going to be looking forwards … I wouldn’t concentrate too much in your reporting on what might have been, it’s where we are and what’s the world going to look like tomorrow.”

Standing alongside Bolger, Workplace Relations Minister Iain Lees-Galloway said he hoped the appointment would show the changes were not ideologically driven but were being made in the best interests of all workers.

He expected the group to consider issues including the threshold which would trigger negotiations and how disputes would be decided if the two sides could not agree. Lees-Galloway and others at the news conference would not be drawn on the particular threshold level.

A return to the dark ages, or a positive step?

Since the proposal was first announced, both National and the business community have warned of dire consequences should they be adopted.

Those calls were somewhat muted, however, when it was announced that under the agreements industry-wide strikes would be impossible.

BusinessNZ chief executive Kirk Hope will represent the business group, while Hospitality NZ will be the voice of small businesses.

John Milford, chief executive of the Wellington Chamber of Commerce, was at the announcement representing BusinessNZ and said it was a case of it better to be on the inside of any changes rather than the outside.

“We’re pleased to be part of the solution, we’re pleased to be around the table because if we don’t put our concerns there we can’t stand on the outside and sort of lob hand grenades in.”

There were, however, still plenty of concerns about how the agreements would work including the cost and other forms of industrial action even though strikes and lockouts have been ruled out.

National leader Simon Bridges was quick to issue an aggressive press release, again raising the spectre of a return to 1970s union-dominated bargaining that would “entrench workplace disruption and rob our exporters of their competitive edge”.

But Barry Foster, a lecturer at Massey University’s school of management, said such dire warnings were unlikely to come to fruition.

“The minimum wage has become, sometimes in an industry, the maximum wage in that industry.”

What industries will be first?

The working group is not set to report back until the end of the year so it will be a while before legislation is passed.

But when it is, it has been widely thought that bus drivers would be the first in line to benefit from the agreements.

Drivers in Wellington are currently embroiled in a dispute with Tranzit, who was awarded a large share of the city’s bus routes previous held by NZ Bus after they were put out to tender.

Bus drivers could be the first to benefit from Fair Pay Agreements. Photo: Lynn Grieveson

Tranzit has offered drivers a slightly higher pay rate, but the Tramways Union allege that has come at the cost of significantly eroded conditions such as overtime.

Other sectors that could be quick to enter negotiations are security workers and supermarket staff.

Companies such as First Security have already announced plans to pay the Living Wage, while grocery giant Progressive Enterprises could be keen to kick things off itself.

Progressive, which operates the Countdown and Fresh Choice brands, is owned by Australian giant Woolworths.

Australia already has a system similar to fair pay agreements that the company is familiar with, so it could move to initiate the bargaining itself if possible, which could lead to its rival Foodstuffs having no choice but to match the agreed conditions.

Kate Porter, a spokesperson for Progressive, said the company had met with the Minister and were supportive of the agreements.

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