Nurses strikes: has the Govt ‘lost control’?

Thursday’s nurses strike was “unprecedented” in modern New Zealand history and more industrial action could be on the way, reports Thomas Coughlan.

At least 30,000 nurses went on strike on Thursday after voting down a $530 million agreement with DHBs.

Nurses representatives have said that if DHBs refuse to provide extra money for a settlement, then balloting for a further strike “will likely be necessary”.

According to data kept by Victoria University’s Centre for Labour, Employment and Work, the industrial action is the largest since 1996, when 42,300 workers went on a combined total of 61 strikes.

Data for individual strikes is unavailable.

Dr Stephen Blumenfeld of Victoria University said the strike was “unprecedented in the post-Employment Contracts Act era”.

The Employment Contracts Act of 1991 made union membership voluntary and rapidly depleted their membership and power, making strikes smaller and less frequent.

The current Employment Relations Act stipulates that workers in essential services, like nurses, must give a minimum 14 days' notice before striking, making further action a minimum of two weeks away.

More money, but none on the table

Health Minister David Clark insisted today there is no more money for nurses.

“That’s the offer,” Clark said.

“I've said that there's no more money for nurses' salaries,” he said.

He said it was time to "take a pause".

"Both sides need time to reflect before returning to negotiations," he said. 

Finance Minister Grant Robertson told the AM Show on Wednesday there was no more money, repeating a line the Government has toed since May, when it increased the amount of money available to DBHs by $250 million to $520 million.

Since then, $38 million was found to provide safe staffing levels in hospitals and community-based organisations.

The current offer included rises of between 12.5 and 15 percent, and an increase of 500 full-time nurses across the country. It also promised a pay equity agreement implemented by December 31, 2019.

The claim that there is no more money is beginning to ring hollow. Government accounts consistently show the Government books are better than forecast, either taking in more tax revenue or spending less than projected.

Core Crown expenses were $439 million below forecast, and in the 11 months to May the Government ran a surplus of $5.228 billion.

Government spending this year will total 28.1 percent of GDP, a healthy 1.9 percent below its self-imposed target of 30 percent.

Unprecedented, but perhaps predestined

As noise of strike action ramps up, industrial relations have become a hot political football, with National blaming high expectations and poor leadership and the Government insisting threats of industrial action are the result of the previous government’s neglect.

National’s health spokesperson Michael Woodhouse said the Government had “completely lost control of the process”.

Blumenfeld cautions against this perspective, arguing that the strikes would be happening regardless.

“These strikes I believe would be taking place now simply because their collective agreements have expired now and that’s the only time when lawful strikes can take place," he said.

“These strikes would have taken place if National had won the last election."

Blumenfeld said the most disruptive recent year for strikes was 2012, when businesses lost 78,589 days to industrial action.

Higher wages necessary

ASB Senior Economist Mark Smith told Newsroom that the spate of demands were a “recognition that we need to take care of people who are finding it pretty tough”.

He said there is now a “recognition that we need to look at the distribution”.

“There’s an equity issue, a lot of firms have done very well and it’s more about sharing the spoils throughout the economy,” Smith said.

Economists often fear that high wage demands trigger out-of-control inflation throughout an economy as firms put up prices to absorb their increased wage bill.

But Smith thinks that inflationary pressure as a result of wage demands across the economy would not be onerous.

“You’ve now even got the Reserve Bank Governor saying wages probably do need to move up,” Smith said.

“We’ve had very low inflation for a while."

Smith put out a note this week calculating that minimum wage increases could add between 0.5 and 0.7 percentage points to annual wage inflation. Adding the impact of fair pay agreements could push it up by close to one percent per year.

Adding this to the moderate outlook for underlying wage inflation could mean the inflation on the labour cost index moves towards three percent - the highest in a decade - and push overall CPI inflation towards the elusive midpoint of the Reserve Bank's target one to three percent range.

But Smith did add a note of caution, saying wage demands should be realistic.

“Wage increases that are not backed by increased productivity can have an impact on overall inflation,” he said.

“Yes the starting point for inflation now is low, but it wouldn’t take a lot to push inflation higher and the Reserve Bank will be quite prepared to make sure that medium-term wage inflations remain consistent with how they want to deliver inflation."

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