I am reading a very interesting book on the role of Collective Bargaining in the Global Economy (Edited by Susan Hayter).
It confirms for me the importance of getting political support to change the labour laws in New Zealand to support industry level/sector wide bargaining, and that labour codes which primarily only provide for enterprise negotiations (like our current law) are ineffective in the long term for both workers and employers. They encourage short-termist behaviour by both workers and employers, leaving the resulting market and human failures for society to pick up (externalities).
As the book points out, without regulation of the labour market, the high road business development that many right wing economists and Governments refer to in their “pie on the sky” narrative, is not a viable business model for any group, and in economies with low levels of collective bargaining – the traffic on the high road is very light (I stole this rather nice expression from the book)!
There is an interesting chapter on working hours. New Zealand has no regulation of working hours. There is no regulation for maximum hours, for overtime, for predictability or for security of hours. The only regulation of total hours per year is the four weeks statutory leave for holidays and even then, a week can now be sold. For casual workers even this does not apply. The only “fetter” on working hours, unless collective agreements regulate them, are some regulations around things like driving time for driving jobs and the law on health and safety, but with no real power, understanding or consideration by the regulator (MBIE) about the impact of unregulated hours, this provides little protection. Hours of work were a core element of industrial awards. When they were scrapped nothing was put in their place.
The external costs and impacts of long and irregular hours are huge and the community meets the costs of them. They include not only high accident and injury rates but also poor health generally and probably have a casual link to a range of poor mental and physical health outcomes (I think there is a link with obesity – exercising takes time and energy as does shopping, cooking and sitting down to eat – I would be interested to know if the link has been studied). They also include family stress, kids with insufficient care and attention and a range of other social ills that impact on the whole community including the absence of communal or even guaranteed leisure time.
The other impact of no regulation of hours is that employers rely on it for increased profit rather than improved labour productivity. Long hours also reduce pressure on wages as low wages are compensated by more and more work. This impacts on the economy as a whole with reduced employment, less demand etc etc. As my interesting book points out – without regulation, individual firm initiatives to cut down hours incur penalties – loss of market share (retail for example), and higher labour costs. Basically without regulation everyone has to take the low road to stay competitive
So as the book makes clear the regulation of hours needs to be done outside of the market as the market provides incentives to do just the opposite even if it is in the best interests of everyone collectively. The “external” impacts have a lag time and the nature of them means they cannot be internalised. Regulating hours of work can be done at four different levels – by statute – some countries have law for a 40 hour week, legislated days of work, overtime etc etc. It can be done by collective bargaining – but this needs to be done at an industry/sector level to be effective and ensure no unfair advantage from long hours is obtained by firms outside the bargaining. It can be done at enterprise level by collective bargaining but the disadvantages of competition arise, or, and as it is with most NZ workers – it can be done unilaterally by employers at the individual level – effectively no regulation at all. Obviously a combination of some or all of these is possible if they are co-ordinated. Without strong industry bargaining – legislation is the only way it can be done and has to do the whole job often resulting in the lowest common denominator becoming the benchmark.
The Forestry industry is a classic case and point. Forestry workers all have individual employment agreements which appear to have few restrictions on hours and some require work any hours any days etc. The pay rate does not vary regardless of the total hours worked (no weekend, night, or overtime rates). Any contractor tendering for work wanting to reduce hours must incur the costs of that (more travel time per tree, more workers, more training etc etc). Forest owners operate a model on the lowest common denominator so they are unlikely to favour a contractor with higher costs. Wages are relatively low ($18 -$22 per hour with no pay for driving time or bad weather), so workers are incentivised to work long hours too and may not take work with employers individually wishing to reduce working time. And the outcome – well you have heard it before.
Forestry either needs legislative regulated hours, or an industry collective agreement that extends across the whole industry which includes the parameters for safe and fair working hours. Such and agreement would be negotiated, with employers and employees discussing what the standards should be across the board. This would require compromises from both sides but the process of bargaining allows issues such as safety and training to be incorporated along with the economic demands of the industry. Better still it should take place in an overall regulatory framework that sets minimum standards for all workers, including creating incentives to limit maximum working hours through things like overtime penalties. This may all sound radical – but actually it is the norm in many successful economies.
The labour share of income in Forestry has decreased from 74% in the 1980’s to 30% in 2004 and is falling. Is the country better off? Has the wealth trickled down because of this amazing change? New Zealand has the fastest growing rate of inequality in the OECD, and you can chuck into that – one of the most dangerous lowest paid forestry sectors. You and me are meeting the social and health costs that this model – dangerous by design – has created. In my view it is a model where profit projections (consciously or not) are dependent on this accident rate. We need legislation to support industry level bargaining to get this change.
The Government is making dramatic further cuts to deregulate the labour market – these are vigourously supported and lobbied for by NZ business organisations and their members. We on the other hand a lobbying for labour law changes that genuinely provide for collective bargaining and freedom of association for workers that want it. There will be screams and hysteria from business about this. They will say we can’t keep swinging the industrial relations pendulum one way then the other. But the pendulum is not swinging, it is stuck near the top on the deregulation side and they are now ratcheting it up to above the mechanism hoping it will break up there. For forestry workers – the Employment Relations Act is irrelevant – it can’t deliver to them fair working conditions, and forestry is not the only industry like this. For forestry workers the industrial relations system is a disaster creating dangerous and poorly paid work.
Business can provide no evidence that the changes they are promoting are in the countries interests. It is a grab of workers rights for short term business gain alone. It won’t benefit the small forest contractors, but it will benefit the forest owners in the short term, enabling other parts of the supply chain to become low wage enterprises (ports, wood processing etc). A better regulated and protected labour market is the only thing that will save business from itself but it will also save the rest of us too and let us all drive on the high road.