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.
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