The elephant yet to leave the room

Grant Robertson tried to bridge the gap between a pessimistic business community and Labour’s unpopular industrial relations policies with his Future of Work forum, Thomas Coughlan writes.

Finance Minister Grant Robertson appeared before media at Parliament on Thursday flanked by Business NZ CEO Kirk Hope, and CTU President Richard Wagstaff, along with assorted papers and luncheon detritus.

This was the first meeting of the Future of Work tripartite forum.

First announced in May, it couldn’t come soon enough for the Government which is seeing business confidence hit lows not seen since the financial crisis.

But the assembled journalists were quickly told that the meeting was about discussing what business, Government and the unions had in common, rather than what separates them.

Questions about business confidence were batted away.

Hope said disagreements were “for a different set of forums, frankly”.

Robertson agreed.

“We worked together on establishing a set of topics that we’ve got a shared and common interest in,” he said.

“There are definitely going to be issues that from time to time the partners here don’t agree on and as Kirk says there are plenty of places for those discussions to take place.”

But there’s no doubt that yesterday’s meeting was a carefully-managed attempt on the part of the Government to address flagging business confidence –  Prime Minister Jacinda Ardern said as much in a speech announcing the forum in May.

She famously called low business confidence “the elephant in the room”.

But back then Ardern could claim, as she did, that “businesses are actually feeling pretty good about their own activity".

She can no longer say that now, as firms’ perception of their own activity now sits at lows not recorded since the GFC.

The elephant, in other words, is still in the room – and worse, it’s getting bigger.

The last few months have begun to look like a rerun of Helen Clark’s infamous “winter of discontent,” when business rapidly went cold on Labour.

The Government will be hoping their forum on the future of work might cause the current winter of discontent to turn, if not to glorious summer, then at least to brighter days.

Productivity, productivity, productivity

Despite the fobbing off of awkward business confidence questions, the meeting was no shallow photo-op.

Several Issues key to turning flagging business confidence around were addressed. The most negative industries have tended to be retail and manufacturing, which have been hit hardest by the Government’s decision to hike the minimum wage.

But the key to sustainable wage growth is not just Government mandated hikes to the minimum wage, but ensuring that workers’ productivity increases.

The more a worker is able to make for a business in an hour, the more that firm will be able to pay the worker per hour.

Achieving productivity gains is easier said than done. Productivity remains elusive throughout the developed world, but a lift is essential if Robertson is to deliver his promise to raise the minimum wage to $20 an hour by 2020 without triggering a rise in unemployment.

And there are opportunities to be explored as well. Wagstaff told journalists that it’s the CTU’s hope that technology is the “elimination of dirty, boring, dangerous work” - meaning advancements might liberate low-paid workers to move into more interesting and lucrative professions.

Will need to be more than a photo-op

The news conference was conveniently timed, but Robertson can claim it as implementation of his own Future of Work study, which the party published while in Opposition.

Government policy from industrial relations to education has seen it implement the worker’s side of the plan, but Robertson will need to work hard to make sure businesses are able to change in ways that make higher wages possible.

A recent study by the Productivity Commission highlighted the issues of capital deepening in New Zealand – meaning businesses have difficulty raising the money needed to make investments in machinery and training to help their workers become more productive.

And this is getting worse.

ANZ’s most recent business outlook survey found that a net 37 percent of businesses expect it to be more difficult to get credit. This is likely a result of banks tightening up restrictions in response to changing regulatory conditions in Australia. Businesses that might want to expand and invest are finding it increasingly difficult to raise the money they need.

Addressing some of these concerns might help the Government put to bed its business confidence problem, while also making its industrial relations priorities a little more achievable.

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