Fair pay agreements – the employers fight back

Written By: - Date published: 10:19 am, December 11th, 2021 - 48 comments
Categories: business, Christopher Luxon, Economy, farming, michael wood, national, Unions, wages, workers' rights - Tags:

One of Labour’s most important proposed reforms is to introduce a fair pay bargaining system.

The reform is essential.  It is clear that under the current system far too many workers are doing absolutely vital jobs on ridiculously low pay.  Just think of our bus drivers, our cleaners and our shop workers and shelf stackers if you need examples.  The workers who got us through lockdowns and made sure we could eat and travel and that our premises were clean and hygenic are not able to properly provide for their families.

The proposal will allow groups of workers to bargain for minimum industry work conditions, not dissimilar to the old award system we had before it was trashed.

The Government set up a working party comprising of worker and employer representatives to report back to it on how a system could work.

The working party was headed by renouned Socialist and former National Party leader Jim Bolger.  He really has had a road to Damascus experience in his later years.  I suspect that his Catholic faith is exerting itself in a commendable way.

His change in thinking is exemplified by a recent appearance on Q&A where he is reported as saying this:

“How do we measure societal progress?”

He told Jack Tame: “The first view the aspirant should be asked is what is your view of the society you want to create? ”

Bolger said the dominant global economic model was dividing society.

“Some are getting obscenely rich and others are going to food kitchens.”

The majority view in the report was that the introduction of a system allowing for collective bargaining was important.  From the report:

The Government asked the Fair Pay Agreement Working Group (the Group) to make independent recommendations on the scope and design of a system of sector or occupation wide bargaining to set minimum terms and conditions of employment and achieve these goals.

Many other countries, especially in Europe, use sector-wide collective agreements as part of their employment relations systems. The OECD recommends a model of combined sector and enterprise level collective bargaining, because it is associated with higher employment, lower unemployment, a better integration of vulnerable groups and less wage inequality than fully decentralised systems like ours. Some countries also link wage increases to skills and training pathways, with the aim of increasing productivity and sharing its benefits. Care needs to be taken in selecting the most appropriate pathway for a given country.

The Group considered that introducing a sector or occupational level bargaining system could be most useful in sectors or occupations where particular issues with competitive outcomes are identified, for example, where competition is based on ever-decreasing labour costs rather than on increasing quality or productivity. It could be useful more generally where workers and employers identify opportunity to improve outcomes across a sector or occupation. We also considered that this may not be a necessary or useful tool in some sectors or occupations.

The employers thought differently.  From the report:

Employer representatives participated actively and constructively in the process and can agree with many of the recommendations and design features of the proposed FPA system. However, they advised the Group they cannot support the compulsory nature of the system for employers as currently drafted.

The employer representatives’ preference would be a system which is based on voluntary participation for employers at the start, and for reasonable grounds for employers to opt out from the process or resulting agreement later on.

Apart from the matter of the compulsory nature of the system, on which there was not agreement, the Group agreed that if the Government decided to introduce this system, then this was the best way to design it.

The report anticipated the process being triggered either by a sufficiently large group of workers or where there are harmful labour conditions existing. Bargaining would then occur.  Strikes during the process would be prohibited and a mechanism for determination of the matter if agreement was not reached was set out.

This week the forces of the right decided to increase pressure on the proposal.  I am not sure if the timing was coincidental but the emergence of a new National leader with a clearly strong employer preference may have been the reason.

On December 9 BusinessNZ head Kirk Hope ruled out BusinessNZ being a bargaining agent.  From Radio New Zealand:

The group said it had rejected the government’s offer to be a default bargaining agent for employer and industry groups, and the $250,000 grant for expenses.

BusinessNZ chief executive Kirk Hope said it had made clear to the government from day one that FPAs were not needed.

“Compulsory FPAs are unlawful under both current domestic and international employment laws and are totally out of step with how we need to work in 2021.”

“They aren’t needed, they remove the flexibility and autonomy of modern workplaces and won’t improve pay and conditions for hardworking Kiwis,” Hope said.

Federated Farmers have also refused to be involved saying that “[w]e support them and for the same reasons they outline we will also refuse to be a negotiating partner for agricultural employers”.

The Farmers’ refusal to address poor working conditions in the industry is strange given that milk prices are at a record high.

Michael Wood, who is increasingly resembling the 21st century of Micky Savage, gave this outstanding response to attacks in Parliament on the policy.

There is a lot at stake here.  If the Government is going to do something about poverty then tilting the current bargaining system in favour of low paid workers is essential.  If the system is not altered then pure capitalism will continue to erode their wages and living standards.

As pointed out by commentator Max Rashbrooke over the past four decades New Zealand has seen inequality increase dramatically.  From Radio New Zealand:

“The rewards that markets handout, the salaries and wages that people get are often unfair, they’re often divorced from what they actually should be.

“And one great example is bringing up children. I mean, that’s an incredibly valuable occupation, one of the most valuable that there is, but there’s no way to reward that in the market.”

If you work for wealthy people you will also earn more, he says.

“That’s part of the reason why people in financial services earn so much money, but it’s not because they’re providing a particularly useful service.

“It’s not a service that’s more useful than aged care. But the people for whom they are doing the work are extremely wealthy, and so can afford to pay really high fees for it. And so that’s another way in which market rewards are unfair.”

Society has tilted over to disproportionately favour the wealthy, he says.

“We know from Inland Revenue research, when you look at the very wealthy, people who have fortunes of over $50 million, a lot of them, nearly half of them, are paying less of their income in tax than someone on the minimum wage, you know, they’re paying a lower than 10 percent tax rate on their income.

“Those are kind of the issues that I’m really concerned about that there are people at the upper end, who just not fulfilling their tax obligations, they don’t feel bound by the same rules that you and I do.”

And at the other end people through no fault of their own are struggling, he says.

This will be one of the most important issues this Government handles.  All strength to Wood and to the Government.  The trade union movement and all workers are relying on you.

48 comments on “Fair pay agreements – the employers fight back ”

  1. Tiger Mountain 1

    Well put Micky. This is basic class politics rather than identity politics. The employers are bricking themselves at the prospect of Fair Pay Agreements being enacted.

    And it is great to see one Minister at least–Mr Wood–not captured by fifth columnist public servants.

  2. millsy 2

    Every single worker in this great country deserves a pay rise, each year (as well as other improvements in conditions).

    Anyone who opposes this is an enemy that is all that is good and decent in this country.

    I know that the TERF Queen, Ani O'Brien opposes them. It seems that she only give a shit about the working class when use uses them as a stick to beat trans people with. If they want a payrise, all that supports dries up.

    Also, it is plain as day that National wants wages and conditions held down and/or cut, and trade unions outlawed.

  3. millsy 3

    I find it amazing that people dont think anything of landlords jacking up rents every 5 mins by $200 at a time, but if workers wants a decent payrise its NO NO NO

    • alwyn 3.1

      "landlords jacking up rents every 5 mins by $200 at a time".

      That is amazing. I am totally appalled that this is going on. Please supply the details of any landlord who is doing this. I'm sure we can arrange a protest against them as soon as you supply us with the evidence of who they are.

      I mean to say. "landlords jacking up rents every 5 mins by $200 at a time" is incredible.

      • Patricia Bremner 3.1.1

        I have a relative who recently said "Oh we are putting up their rent $100" I asked "Why so much?"

        "We had to upgrade the insulation and their heat pump died." I said, "but aren't they paying $540 already?"

        "Yes but we need to recoup our costs" I said "Inside a year? Then it will be $5000 a year from then on.. is it gold plated?" I got a blank look. Money seems to remove some people's empathy.

        Years back they had a maths school, and hired Korean students…. I don’t know what visa they had but I can guess. The rellies go to church but charity is given with ‘deserving poor” attitudes.
        Changing those spots is almost impossible.

        Oh and they have 4 more properties in Auckland than Chris Luxon. They may even be in that 400.

        I take back my previous impressions of Jim Bolger, it is pleasing to hear he sees the damage the Contracts Act did with the “spiral to the bottom”.

        • Obtrectator

          'I take back my previous impressions of Jim Bolger, it is pleasing to hear he sees the damage the Contracts Act did with the “spiral to the bottom”.'

          Hmmm. Easy for him to do it now, when (a) it won't damage his career to say so, and (b) he can't do very much about what he now affects to deplore. I judge people by what they do or say at the material time, not sudden fits of bad conscience years or decades later. He gave Ruthie her head – that's what will count at the Day of Judgement.

          • Patricia Bremner

            You are probably right but we will see.. interesting he does not really rate Luxon. The divisions remain.

        • alwyn

          I personally think that senior politicians investing in rental property, whether houses or apartments, is one of the more sensible ways for them to go.

          If they invest in shares in New Zealand companies there is always the problem, real or perceived, that they have a conflict of interest. Governments can easily make or break a company and giving a contract to any business can be attacked if there is a shareholding by a senior politician. If people are going to claim foul it doesn't even matter if they are in the Opposition. Do you remember people on the left throwing accusations at John Key early on because he owned some shares in the railways?

          It is very difficult to see how a politician could really give themselves any real pecuniary advantage in the residential property market, or at least any advantage that is not going to be shared with tens of thousands of other people.

          The only options they have to avoid the, usually unfair, accusations from their opponents, is to invest overseas or to put their savings into bonds or term deposits. Overseas investments will, of course, attract complaints from their opponents. TDs have a return of about negative 4% at the moment though. You could be like Alan Greenspan I suppose when he was Federal Reserve Chairman. He put all his savings into 30 year US Government bonds

          No, in New Zealand I think that the best place for such people is in rental housing. IIRC that is something Helen Clark did in Rodney. It seems to me to be the best option for people in such a position.

          • Craig H

            Good points about the issue of perceived conflict of interest no matter what investments they end up choosing.

  4. ghostwhowalksnz 4

    This sort of system of 'national awards' is still used in Australia and probably the major reason their wages are higher for similar work in NZ. It sets minimum pay rates not maximums

    Business NZ wasnt so worried back in 2010 about the 'rapid law change to make it legal', where the rights to 'collective bargaining' where removed only for those who work in film industry- since restored in 2020

  5. pat 5

    "This state of affairs is perhaps symptomatic of the future economic regime of capitalist democracies. In the slump, either under the pressure of the masses, or even without it, public investment financed by borrowing will be undertaken to prevent large-scale unemployment. But if attempts are made to apply this method in order to maintain the high level of employment reached in the subsequent boom, strong opposition by business leaders is likely to be encountered. As has already been argued, lasting full employment is not at all to their liking. The workers would 'get out of hand' and the 'captains of industry' would be anxious to 'teach them a lesson'. Moreover, the price increase in the upswing is to the disadvantage of small and big rentiers, and makes them 'boom-tired'. In this situation a powerful alliance is likely to be formed between big business and rentier interests, and they would probably find more than one economist to declare that the situation was manifestly unsound….."

    All foretold almost a century ago…..Michal Kalecki


  6. vto 6

    a person should be paid enough to provide for themselves from a decent days work.

    currently that is laughable

    hence working for families subsidy to business

    argument against this, a.k.a. fed farmers, is obscene and they deserve no respect.

    . . .

    push the wealth down and society strengthens and prospers

    push the wealth up and society divides and weakens

    . . .


  7. observer 7

    Why are ACT and Paul Goldsmith now asking patsy questions to Ministers?

    Michael Wood is very capable. I'm always impressed by his calm approach.

  8. vto 8

    so fed farmers dont think an industry-wide structure is any good…

    kinda like fonterra i guess…


    dunno how they can keep a straight face

    • ghostwhowalksnz 8.1

      Good point . Fonterra 'decides' a single milk price for all its farmers, wheter they are in Westport or Waikato or the outskirts of Auckland. Same price for everyone.

      Not for dairy farmers those 'individual contracts' when it come to getting paid by Fonterra

      • gsays 8.1.1

        "Same price for everyone."

        Dare I say it, that sounds a tad communist…

        • ghostwhowalksnz

          Yes . The price equalisation that Fonterra uses means those dairy farmers milk going to factory that makes the lowest value product like milk powder are paid the same as those whos milk goes to higher value like cheese or fancy 'nutri-ingredients'

          ( They have introduced a miniscule amount for 'good milk' from 2020-10c/kg)

          There may still be a small differential for town supply liquid milk because they are expected to supply for a longer season for all the year. But dont know that this still applies as the tanker trucks can travel far and wide .

    • Patricia Bremner 8.2

      devilVTO they have had lots of practice.

      • In Vino 8.2.1

        Sound system. Electricity and petrol also used to be the same price throughout the country for the sound reason that every citizen needed these things equally

        Then in the 80s came Rogernomics with the fanatic application of the specious 'User Pays' dogma. Ideological, of course.
        ‘Profit is not a dirty word’ they preached, and the profit-gougers flourished. User pays and independent contracts were just some of the tools they used to drive down wages, cut social spending, and vastly increase the gap between Rich and Poor. The results are now staring us in the face, yet we still have people silly enough to continue to believe in their dogma,,,

        • alwyn

          Motor Spirit was NOT the same price throughout the country. There was a basic price, which was the same, but there were charges called "differentials" that depended on where in the country the product was sold. The price at Fox Glacier was much higher than in Auckland.

          I also don’t think that electricity was the same price but I am not sure of the details.

          • vto

            Is that all you can come up with in response to the very wide significant point that In Vino made Alwyn? The price of fuel in Fox Glacier?

            How about the point that dairy farmers like and use an industry-wide structure to set their incomes, yet decry such a structure as "communism" if employees try to use it?

            Fonterra, the epitome of socialistic communism…

            pathetic hypocrites…

            A bit like the limited liability company… another socialistc communistic structure whereby people come together to achieve an end… all good for business people to use these, but when the downtrodden try to use same to improve their poorly place all hell breaks loose..


            F..king arseholes

            • alwyn

              My, my. Aren't we grumpy this morning?

              I am merely pointing out to anyone reading what Vino wrote that he starts with, and bases his argument on, a falsehood. You then continue the problem by making up grossly exaggerated claims about people you don't like.

              If you are claiming that the dairy farmers "decry such a structure as communism" etc I'm sure you will be happy to provide examples of dairy farmers and their representatives doing so?

              • vto



                federated farmers

                canterbury dairy farms limited

                … insert company name… limited

                the list is endless

                all socialist structures


                it isn't that i dont like them – i absolutely don't like their attitude to low income workers who can't support themselves with a decent days work

                yep, arseholes

                • alwyn

                  Well, we are certainly in no doubt that you on't like anyone, or any company, involved with farming.

                  I still don't accept that any of the organisations you are talking about are either Socialist or Communist in their structures but that wasn't my main objection to what you are claiming or what I was asking you for evidence of.

                  You claimed that those Organisations, and their shareholding farmers, labelled their workers as Communists. You never provided any evidence of this at all. The closest I could find was a single farmer in the Waikato who turned up a a show with a placard claiming that the PM was a Communist. Just one person and they weren't complaining about either a farmworker or even a union official. Hardly calling his workers Communists was he?

                  Now, where is you evidence for the claim you made?

                  • Pat

                    id equate them more in line with freemasons…much like the law society…the strongest union in the country.

                  • vto

                    the evidence is in the placards at farmer rallies, and in pretty much every conversation I have with my farming mates and family in my areas.

                    and naff off with your claim i dont like farming or farmers – that was explained. you ignored.

                    the point here is that nation or sector-wide organisation is utilised by farmers for their advantages, but as soon as the poorly employees try the same all hell breaks loose.

                    but, you know, find something off-main-topic to pick up mr tedious

                    you clearly hate workers getting pay rises to a level that they can live off

                    do you support workers being paid to a level they can live off and provide for their families in exchange for a decent days work?

                    and, if a cooperative isn’t a socialist structure, what is it? haha, it is completely socialist. head in the sand, conned by the great swindle that vilifies the natural socialist settings of every human being.

              • Pat

                The relevance?…i dont know. are unions considered communist?

            • ghostwhowalksnz

              There was an 'equalisation' scheme for petrol prices. I dont know that it was exactly the same everywhere but they definitely tried to equalise it via the price at the various coastal fuel depots.

              Upper North island would have paid more for the south island to have similar prices

  9. DukeEll 9

    If this government had been successful in dealing with any of its crises, excluding covid, to date there could be far higher support for this.

    but there isn’t a single crises they’ve fixed through legislation. Housing? Mental health? Suicide? Gun possession? Child poverty?

    Now they think they can magic poverty away by paying people in Westport the same as auckland. Or people in auckland the same as westport

    • Ad 9.1

      Yeah and what have the Romans ever done for us anyway?

    • ghostwhowalksnz 9.2

      Repeating the national partys talking points Ell ?

      'paying people in Westport the same as Auckland."

      The award wage system is a minimum, employers in Auckland or anywhere else can pay more if they want to retain staff or a particular person.

      The amounts etc are negotiated by employers and workers , not legislated by the government . Except for minimum wage which is already the same in Westport as it is in Auckland.

    • millsy 9.3

      Please explain to me why you think wages in Westport should be held down.

      • ghostwhowalksnz 9.3.1

        Higher demand for labour and more employers in bigger centres means more choice for employees….'go down the road'

        Its not holding it down in Westport

  10. left_forward 10

    Excellent article MS, thank you.

    100% agree with your concluding remarks.

  11. Patricia Bremner 11

    Michael Wood is a doughty body who will see this through. Great article Micky, this is the legislation Andrew Little spoke of, and to see it coming to fruition is gratifying.

    Most workers of today don't remember those working conditions. ghostwhowalksnz you are correct. Many a worker could not believe the pay and conditions offered in Australia. That took my brother and his family, our youngest son and several friends.

    What the wealthy know is good pay rates may bring many home again, and their rort of "cheap labour" will be exposed and ended in so many spheres.

    • Blazer 11.1

      Current house prices will work against bringing people home again.

      They are working in making young skilled workers fuck off to OZ…of course.

      • Craig H 11.1.1

        Trans-Tasman migration figures show that net migration has generally been in the direction of Australia for most of the past 20 years – it's hardly new now. Totally agree that the housing disaster is not going to improve that and may well make it worse, but it's not like it wasn't a problem before either.

  12. Stuart Munro 12

    Now this is an encouraging development. If Labour actually resolves the structural injustices created by decades of ill-conceived policy that will be even better.

  13. JO 13

    yes Fantastic article, Michael inspiring, aptly named, Roger out.

  14. Hunter Thompson II 14

    I hope health sector workers, mainly nurses, get a pay rise. They deserve it for the valuable work they do.

    Just increasing staff numbers on each ward would be a good start (speaking from my experience).

    If nurses can't afford to live in our major cities they won't be available to work there.

    • ghostwhowalksnz 14.1

      They are getting pay rises…especially for the newer nurses who are at lower ends of pay scales.

      Not so much for those at top end of scale when they are getting $90k plus

  15. Stephen D 15

    If raising taxes are off the table, then substantially raising incomes is the only way to close the huge gap twixt rich and poor.

  16. Peter Bradley 16

    Given the choice between maintaining the good will of the motivated, voting, middle class and helping out low-voting, low paid workers … I'm not as confident as the author about the outcome of the proposals. The business organizations that have lined up against it far outweigh the paltry membership of NZ unions when it comes to political clout and media attention.

    If the proposals proceed at all, they'll be watered down to a nutrition-less gruel. If you want to know what this looks like just observe the termination of social uplift benefits currently underway in the US congress. These are child tax credits to poor and working class families that are going to stop in January – thanks to a congress under the full control of the Democratic party.

    This is how a democracy works – you are forced to serve the economic needs of those that turn up to vote against the needs of those that don't.

    In addition – due to a complete and fundamental lack of class consciousness – many of the low paid workers that may benefit from progressive changes will – if they turn up to vote at all – vote against such policies because this is what working people have done election cycle after election cycle.

    The history of English speaking democracies is the history of the gradual but ultimate destruction of class consciousness. Unions with somewhere between 5% and 10% of the working population are completely impotent as a serious political force and everyone knows it.

    The NZ media are already salivating at the prospect of turning nasty next year and the government will act accordingly – just as they did with the CGT debate. Because such debates require considerable spine and moral confidence and a unbending desire to change the ingrained attitudes to wealth and re-distribution that dominate the NZ economy.

  17. Blazer 17

    Getting this through will be a litmus test of what Labour's real 'raison d'etre' is.

    They have no resolve to attack the housing crisis in a meaningful way.

    Being 'Natz lite' with a majority is quite shameful really.

    Maybe they do not understand what 'transformational' means.

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