Analysis: It was meant to be the biggest change to employment law since the 1990s. Cabinet was set to introduce a Bill so employer representatives and unions would bargain for minimum terms and conditions for workers right across a particular industry or occupation.
But now, the Government-brokered consensus is falling apart. BusinessNZ is refusing to take part in the creation of the compulsory agreements at the heart of the Government’s industrial relations policy. The Government calls them fair pay agreements; the employer’s organisation calls them unfair and out of touch with modern ways of working. Unions say they’re “protection against unscrupulous employers”; the opposition says they’re nothing more than “payback for unions”.
“It’s another example of this Government trying to centralise control in Wellington,” says chief executive Kirk Hope. “Just ask teachers, police officers, and nurses how good it is to be under a centralised, bargaining system.”
It comes as we report a new public service census revealing state sector pay rises and work-life balance are again falling behind the private sector.
That will come as no surprise to Hope, who believes centralised bureaucracy lacks the flexibility that has helped private companies survive and adapt through Covid and lockdowns.
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He wrote to Workplace Relations Minister Michael Wood yesterday, saying BusinessNZ would not negotiate “unlawful compulsory national pay agreements” on employers’ behalf, and would not accept $250,000 funding to help build negotiating capability.
“Compulsory fair pay agreements are unlawful under both current domestic and international employment laws and are totally out of step with how we need to work in 2021,” he says this morning. “They aren’t needed, they remove the flexibility and autonomy of modern workplaces and won’t improve pay and conditions for hardworking Kiwis.”
The agreements were a 2017 Labour manifesto promise. They were initially blocked by NZ First, but the Labour Government recommitted to them after the election.
“It’s wrong for us to be part of a scheme that will do more harm than good to businesses and employees.”
– Kirk Hope, BusinessNZ
Wood had already warned the Bill’s introduction to Parliament, meant to be this year, could be delayed into 2022. The NZ Herald says he blamed the Delta outbreak – but this may delay things further.
This rips up a picture postcard image of a three-way agreement between BusinessNZ, the Council of Trade Unions and the Government. What is puzzling is how it got so far, given BusinessNZ (which Wood described as a special partner) says it has been warning from day one that the deals are fundamentally flawed.
Hope says the BusinessNZ Network, directly and indirectly, represents over 70,000 businesses employing nearly 80 percent of the workforce, but that still doesn’t give it a mandate to represent all businesses.
“Fair pay agreements are about making sure that many of the low paid workers who have gotten our country through Covid, like bus drivers, supermarket workers, and cleaners, get a fairer deal. For 30 years these workers have been left out in the cold in our labour market, and we clearly and transparently campaigned on fair pay agreements to change this.”
– Michael Wood, Workplace Relations Minister
BusinessNZ never agreed, despite being written into the system without its agreement, in a Cabinet paper in May. Then Ministry for Business officials had sent a letter during lockdown, formally requesting they become the default bargaining party for businesses.
The answer is no. “It’s wrong for us to be part of a scheme that will do more harm than good to businesses and employees,” Hope says.
The National Party’s workplace relations and safety spokesperson Paul Goldsmith is calling for the Government to ditch its fair pay agreement policy entirely, following BusinessNZ’s exit. “The agreements would remove the flexibility and autonomy modern workplaces need to grow and flourish,” he says. “It’s another blow to a policy that’s more about payback to the unions than anything else.”
But Wood says BusinessNZ was only intended to be a backstop for negotiations, in the event that a sector was unable to form a bargaining unit themselves.
“The specific part of the system that BusinessNZ have said that they will not engage with is a fairly small aspect of the framework and will not have a major impact. In the vast majority of cases we expect that employer groups in each sector will bargain themselves,” he says.
If there is no backstop, the talks would then be determined at the Employment Relations Authority. “This is unlikely to result in any substantial delays, and in some cases may actually speed up the process.”
“Fair pay agreements are about making sure that many of the low paid workers who have gotten our country through Covid, like bus drivers, supermarket workers, and cleaners, get a fairer deal. For 30 years these workers have been left out in the cold in our labour market, and we clearly and transparently campaigned on fair pay agreements to change this.”
“They prevent unscrupulous employers from forcing the costs of competition onto workers and their families.”
– Richard Wagstaff, CTU
Wood says BusinessNZ has consistently made clear that it opposes fair pay agreements from early on in the process, so its comment today is no surprise. “It is their right to hold that position. Nonetheless we have sought to engage with them constructively as we have designed the policy to ensure that the overall framework is coherent and workable. Their input has been valuable and I thank them for it.”
The Council of Trade Unions, which will be a “backstop” negotiator for workers, is expressing its continued support for the delivery and implementation of fair pay agreements
Union president Richard Wagstaff says they are common in workforces around the rest of the world, like Australia – and they have a more productive economy than New Zealand.
Fundamentally, fair pay agreements are about putting in a minimum floor for wages and conditions, he says. “They prevent unscrupulous employers from forcing the costs of competition onto workers and their families.
“Just as we have a minimum wage in New Zealand, fair pay agreements will provide a statutory minimum. There will also be an ability to vary agreements regionally, to reflect local economic conditions.
“All firms will still be required to negotiate individual or collective agreements with their staff and in the process be free to negotiate with their employees for anything above this baseline. A fair pay agreement simply provides a minimum floor on core conditions to prevent the race to the bottom we currently experience.”
Wagstaff emphasises that any registered union could initiate bargaining under the proposed law. “The CTU does not have any monopoly on the process,” he explains. “Nothing in the draft fair pay agreements proposals would have prevented the Government or businesses from responding to Covid … Indeed, fair pay agreements may even have made the process of responding to a pandemic or future economic shock simpler – by giving each employee and employer clear expectations.”
