Think-tank opposes fair pay agreements

Think-tank the New Zealand Initiative has produced a report which appears entirely at odds with the Council of Trade Unions over proposed fair pay agreements. Photo: Getty Images
Think-tank the New Zealand Initiative has produced a report which appears entirely at odds with the Council of Trade Unions over proposed fair pay agreements. Photo: Getty Images
Proposed fair pay agreements (FPAs) have been labelled a ''retrograde step'', harking back to centralised wage bargaining days, and undermining the economy.

Yesterday business-backed think-tank the New Zealand Initiative released its Work in Progress report, by the group's chairman, former law firm head Roger Partridge and former Business Roundtable economist Bryce Wilkinson.

The New Zealand Initiative appears entirely at odds with the Council of Trade Unions (CTU) take on FPAs.

Mr Partridge and Mr Wilkinson argued not only that FPAs would cost jobs, while failing to lift New Zealand's historically poor productivity, but that the main arguments used to justify the reforms were either wrong or that the policy answers lay elsewhere.

The report comes a fortnight after the CTU published a report from the economic consultancy BERL which found no international evidence that collective bargaining had a negative impact on economic growth.

Otago Southland Employers' Association chief executive Virginia Nicholls said introducing FPAs would be the biggest shake-up yet, in an employment relations landscape which was already subjected to seismic shifts, such as the Employment Relations Amendment Act.

''This is a cumbersome, one-size-fits-all approach with little thought of the downstream consequences, not just for those it is attempting to protect, but the country as a whole,'' she said.

The name ''fair pay agreements'' was something of a ''misnomer'' as the proposed changes could more correctly be labelled ''national awards'', she said.

That was because ''fair pay'' meant employees doing the same job in any one sector, such as truck drivers, must be employed on the same terms and conditions everywhere, regardless of where they worked in the country or who they worked for.

The earlier CTU report identified supermarket workers, security guards and cleaners as three employee groups who should be the first to negotiate FPAs under reforms which Workplace Relations Minister Iain Lees-Galloway has yet to take to Cabinet for approval.

''This would be a retrograde step, back to the days of centralised wage bargaining that would hamper the one thing proven to increase wages and benefit the country as a whole - a high-performing economy,'' she said.

She believed a voluntary approach would be better, where an FPA would be a non-binding ''code of good practice'', unless an employer agreed to be bound by it, in which case it would take on the status of a multi-employer collective agreement, binding only those who chose to be parties to it.

The working group recommended that FPAs be triggered if either 1000 or 10% of workers in an industry or sector, whichever was the smaller number, vote to seek a nationally bargained collective agreement.

Workers on individual contracts would be automatically covered by FPA negotiations, whether or not they chose to be, and would be represented by a trade union to which they may or may not belong. Employers would be represented by their national associations.

Mrs Nicholls said under that scenario an FPA would be sufficient to trigger a negotiation process which eventually bound all workers and employers in that sector, nationwide.

Otago Chamber of Commerce chief executive Dougal McGowan took a more conciliatory line, saying a balance between pay and flexibility had to be struck, given ongoing staff shortages in many southern sectors in recent years.

''Skilled, qualified staff are hard to find, so they have to be paid more,'' Mr McGowan said.

However, he said when wages did go up, businesses were forced to look at their margins and profitability, so either product or services prices went up, or people were laid off.

''Most employers I know want to look after their staff,'' he said.

-Policy recommendations are expected after the January report of the Fair Pay Agreement Working Group, led by former National Party prime minister and architect of the original 1990s labour market deregulation, Jim Bolger.

- Additional reporting: BusinessDesk

simon.hartley@odt.co.nz

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