More consultation put in the way of fair pay agreement legislation

Business

Unionists pushing for fair pay agreements get another consultation document rather than the draft legislation they were hoping for; National says the Government needs to stop stalling and can the idea altogether

17th Oct 19, 2:07pm by Jenée Tibshraeny

Patience is a virtue Council of Trade Union (CTU) members are being forced to exercise, as the process to legislate a framework for fair pay agreements drags out.

A working group, headed by former National Party prime minister Jim Bolger, in December 2018 reported back to the Government on what the framework should look like.

Now, 10 months later, the Government’s asking members of the public for their feedback on the working group’s recommendations.

CTU President Richard Wagstaff said he was pro-consultation, but believed the issues had been sufficiently hashed out by the working group, where business and workers’ interests were represented.

He wouldn’t go so far as to say the Government was stalling on the matter, even though it can’t guarantee legislation will be introduced before the 2020 election.

While Prime Minister Jacinda Ardern in August 2018 tried to allay businesses’ concerns by saying she envisaged no more than one or two agreements concluding during this electoral term, she on Tuesday conceded fair pay agreements were part of the "longer term solution" for low wage earners.

Digs at unionists NZ First Leader Winston Peters made in his speech to the CTU on Tuesday evidenced his party was holding up the process and causing the Prime Minister’s focus to continue being on “consensus building”.

NZ First MP Shane Jones explained: “Our party wants to be absolutely sure that we don’t impose uniform or universal obligations on businesses, because there’s a different cost structure between Eketahuna, Invercargill and Auckland.

“We need to be mindful of the actual businesses and their free cash flow to absorb the transitional costs.”

The purpose behind fair pay agreements is to create a new mechanism for collective bargaining, setting binding minimum terms at the sector or occupation level.

The CTU has identified security staff, supermarket workers and cleaners as people working in sectors that could benefit from fair pay agreements.

The Employers and Manufacturers Association (EMA) is completely opposed to the idea.

It believes they’ll reduce productivity by causing inefficiencies, reducing flexibility of labour markets and increasing the cost and complexity of businesses’ operations.

“We’re worried that for some businesses, if free pay agreements do result in higher wages, they will simply have to cut down their workforce, or in the case of small to medium sized enterprises, shut up shop,” EMA general manager of advocacy and strategy Alan McDonald said.

“Those at greatest risk will be the unskilled, unemployed and inexperienced – particularly our young people.”

The EMA is also concerned fair pay agreements don’t allow for voluntary negotiation and arbitration, which it claims breaches international law.

“The low threshold of only 10% of a sector needing to opt in also means employees can’t choose not to be represented by unions in their wage negotiations,” it said.

Meanwhile Wagstaff was pleased by this 10% proposal, as well as one to see contractors covered by the legislation.

National’s workplace relations spokesperson Todd McClay said: “The reality is, the Government has realised these pay agreements will harm the economy by imposing new and higher costs on businesses.

“Forcing all workers in an industry to enter union negotiations if just 10% of workers in the industry are in favour is compulsory unionism by stealth.

“The Government knows that pushing ahead with these pay agreements will see business confidence plunge even further and hurt its poll numbers, which is why it’s stalling for time.

“Iain Lees-Galloway needs to take action and just dump this terrible policy.”

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29 Comments

by RollingOn | 17th Oct 19, 2:19pm 1571275159

Labour will fall on its own ideological sword.

Given how unpopular CGT was with Labour voters, I suspect this will go down like a cup of cold sick. The party is just so much further left than the electorate.

by printer8 | 17th Oct 19, 4:31pm 1571283072

NZ First have extracted a considerable cost from Labour as a coalition partner. Both the CGT and now this delay of a fair pay agreement being pushed out beyond the next elections suit NZ First and their constituency (the farmers and business owners especially of Northland) but both so much against the interests of Labour’s constituency.
The wider public will see this as another hollow promise failure (along with the 1800 additional police KiwBuild, increasing shortage of state housing, increasing homelessness et al), and to their traditional voter base, a total betrayal of their support. NZ First may be looking to increase their vote but after having cut National adrift, they are fast shooting their necessary major coalition in the kneecaps.
(Outside call; look for any evidence of NZ First becoming more buddy with National - a couple of wiffs lately)

by waymad | 17th Oct 19, 2:24pm 1571275484

Contractors covered by Unionista? I predict a rapid temperature drop in Hades before That happens.....

by Yankiwi | 17th Oct 19, 2:35pm 1571276149

There is definitely a place for unions. There are also arguments against unions. In my early working career, I hired in to a very large company as an hourly employee with union representation. A couple weeks into my job, I was quietly working away and the union shop steward came over and had a chat with me. He asked me to stop working so hard (I was doing small parts assembly, and was figuring out the most efficient way to do my job). He said that I was making people look bad, and that I was taking away work from others due to my efficient work. It was shortly after this that I decided that being an hourly union employee wasn't the best fit for me, and I put an application in to Uni to study aeronautical engineering. I thought that it might be better to design aircraft than to build them. I should thank that nameless shop steward as he set in motion a wondrous career for me...

In later years, I hired in to the same company as a salaried engineer. For most of my career I was in an engineering union, which had some of the same issues that the mechanics union had. The primary issue is that there was virtually no method for getting remuneration as based on productivity instead of seniority. I saw this problem in both the blue collar and white collar unions.

My view based on experience is that current unions negatively affect productivity. I was lucky in that most of the time as an engineer I was able to go down to the shop and work with the mechanics when the need arose, despite union rules prohibiting this. Some of this may have been due to my background coming from hourly, as other engineers had grievances filed against them for doing the same thing.

You want to continue having low productivity, increase union power. Once I got away from union representation, my compensation increased far faster than if I had continued being represented by a union as I was able to negotiate based on productivity instead of seniority. I'd be very concerned if the bar is set at 10% for union requirement.

by The_4th_estate | 17th Oct 19, 3:23pm 1571279016

Pretty fanciful story. Go to the most productive countries on the planet and learn about how important unions are in holding management to account over their decision making. If there was a productivity problem where you worked its because the managment was piss poor. Its a widely acknowledged issue in our economy btw, workers by and large can't influence productivity in this country like management can because the workers lack the representation and the bosses don't listen, ergo its a management shortcoming if the company isn't productive.

by Foyle | 17th Oct 19, 4:03pm 1571281397

"This story doesn't match my beliefs and therefore it must be wrong". Lets ignore the rapid increase in NZ's productivity and growth and droping unemployment that occurred after end of compulsory unionism in '91. Workers enjoyed rapidly increasing wages and standard of living precisely because the unions weren't screwing everything up any more, the drag they had created on everything was horrendous and worsened the lot of the very people they claimed to be helping. I look at the ex union apparatchik MP's; Little, Curren, Galloway and it is pretty obvious that these are not people you want controlling anything in the economy.

by sharetrader | 17th Oct 19, 4:40pm 1571283648

and look at the inequality increase since 91, workers at the bottom did not enjoy the increases you are talking about in fact they got left behind that is why we now have WFF and the min wage going up so fast
those at the top yes there wages increasing at a much faster rate, but that was not all down to their individual productivity.
there needs to be balance so all the workers in the company can enjoy the profits, that has not happened for the last twenty years.
I am not saying unions are the answer far from it but we need something to reduce inequality in the workforce

by Yankiwi | 17th Oct 19, 7:42pm 1571294575

There will be, and should be, some inequality in wages if one is looking only at the weekly wage.

There should be no inequality in the productive wage. That is, for a unit of production, one should get the same payment as someone else producing the same unit. This is equality.

Stating that Joe Bloggs should get paid the same as Joe Schmo even though they have very different productivity, well, I am not in favor of this concept. Maybe the pay scale shouldn't reflect the precise productivity level, but it should have at least be related to productivity in some fashion.

BTW, nothing fanciful about my prior anecdote. It was an accurate depiction of my past. Sadly, there are some that are not willing to see reality and are blinded by their self-interest. That said, one could say that I'm blinded by my self-interest as I am demonstrably a highly productive worker. I recognize that aspect. I do worry about what type of society would evolve if there were no incentives to excel. Apple and Microsoft would not exist, this website would likely not have happened, and even the internet, well, without incentives stuff doesn't happen in the large majority of circumstances.

by skudiv | 18th Oct 19, 2:19pm 1571361583

Even if one person has twice the productivity of another person, they both still need the same money to live on, and should both get paid the same. You can discriminate against people based on ability, that's as bad as being a racist nazi. Discrimination is nazi ideal and we all know how that ended up.

by Yankiwi | 18th Oct 19, 3:27pm 1571365650

I recommend a shift to Venezuela if you wish uniform remuneration. I would have suggested another location as you are apparently advocating "from each according to his ability and to each according to his needs", but that paradigm failed a while ago.

Yes,a fair and just society should cater to the incompetents (and "less competent" individuals) so that all can have a happy and "productive" life. That doesn't mean that the lower productivity people should get the same wages as the highly productive individuals in society.

We got to Godwin rather quickly... desiring remuneration based on capability isn't being a racist nazi.

by Nzdan | 18th Oct 19, 6:32pm 1571376745

Sounds like you just need to work harder?

by Yankiwi | 17th Oct 19, 8:07pm 1571296020

sharetrader, beware of unintended consequences in regards to increasing the minimum wage beyond the productivity level. There are a few cities in US that are learning about this issue. Paying employees more than their productivity level tends to reduce the number of employees employed.

Looking below, supermarket workers were mentioned. Look at the supermarket checkout clerk as an example. Most people at the end of their shopping trip tend to look at the efficiency of the checkout clerks working, and switch lines from the slow person to the fast person to minimize their wait. If one clerk is 20% faster than another clerk, should that faster person get paid more than the slow person? According to union rules, they should get paid the same. In most union instances, their pay will be dependent on seniority independently of their capability. Why shouldn't the faster clerk get paid appropriately for their increased productivity?

One of the best jobs I had while at Uni (I paid my own way through Uni, working while studying) was doing piecework for a company that made stuff for musical instruments. Writing this comment had me look the company up to see how it is doing now ( https://www.ernieball.com/ ), I am happy to see that they are still going strong. BTW, that is a strong hint as to where I went to Uni... They paid minimum wage to their workers, along with an amount for each item you made above a set minimum. One could cruise along and make minimum wage without much effort. Or, one could figure out the optimum manufacturing processes and get up to at least double the minimum wage with some concentration and effort. They had a record board for the highest production level on each assembly line in a standard shift. A couple years after graduation I returned to visit the company and saw that the records I had set during the year I worked there were still intact. This is the essence of how to maximize productivity. If they had a union, there would be no productivity bonus and the per employee productivity would be far lower without the production incentives.

by streetwise | 18th Oct 19, 2:44pm 1571363055

Yes Yankiwi, I always take a stopwatch to the supermarket to measure very precisely the rate of processing of each operator. I then enter the results into my checkout-operator-timer-app where they are processed according to the appropriate algorithm. The app throws up the top 3 results. I then recheck those 3 by retiming and reprocessing
them to select the fastest as I must achieve reproducible results. Sometimes I get the results peer reviewed by another customer who is also determining the fastest checkout operator with his or her checkout-operator-timer-app.
These apps were developed by an enterprising young Kiwi entrepreneur who gained development finance from many Kiwi start-up funds. He sold out to an U.S. company for 1 billion dollars and is now living in opulent retirement in the Bahamas. Wonderful story.

by Yankiwi | 18th Oct 19, 3:32pm 1571365965

Great to see that the legendary kiwi creative mentality has gone beyond the #8 wire stage! :)

by Foyle | 18th Oct 19, 9:13am 1571343228

The gini coefficients for NZ rose rapidly in the late 80's but had nearly plateaued by 1991 - and haven't really changed since then, so your thesis doesn't seem to be backed up by data. Also; the great improvement in NZ's GDP per capita post-unionism has lifted the standard of living of even the poorest massively, and working for families is effectively a tax break for lower income people to keep things more balanced. Trying to legislate against income disparity is a terrible idea, just means more valuable workers go offshore to earn more, and less valuable workers will lose employment if you pump up minimum wages too far.

by The_4th_estate | 18th Oct 19, 9:38am 1571344725

Perhaps you should move into medical cannabis because you have to be smoking something stronger than Parkdrive to come up with a statement like that. Its been long identified that the fabled productivity gains that were to follow labour deregulation in this country simply never materialized because abundant cheaper casualized labour conveniently made available by tipping the economy into a state of economic shock from poorly executed deregultion meant investing in productivity boosting technology wasn't required. The USA does invest heavily in mechanising any process it can, but it also exploits a vast underclass where it doesn't mechanise and that aint pretty at all. Meanwhile here in NZ its another day of sub par efficiency and breakdowns for all the redundant equipment littering workshops and factories across the Country...

by Yankiwi | 17th Oct 19, 8:22pm 1571296974

The_4th_estate,

The top 3 GDP per capita countries are Norway, Luxembourg, and USA. Norway gets its very high value due to oil production along with the fact that oil is getting rather valuable at present. Luxembourg is an interesting and unusual country in this regard. It appears that their primary production is in the financial sector. This is a bit worrisome in my view... what could go wrong there??? :) USA, well, they used to be the most productive of all countries by a large margin. They have slipped to 3rd place due to outsourcing and the financialization of their economy. So, tell me more about the most productive countries on the planet and how important unions are in regards to their productivity? The data suggests that your comment about the importance of unions to productivity would not be accurate.

There are certainly very important reasons for a union. The labor situation of a century ago in the US is a prime example. In the past several decades in the US, unions have most certainly impeded productivity.

by ddporter | 17th Oct 19, 9:47pm 1571302076

The USA has many problems, Private Health care has ruined many families financially, their minimum wage is a joke, there is NO legislation for annual leave, its up to the employer, Trade Unions in the USA have been put down for years,this has been done on purpose by the Employers and the US Government to please WALL ST. The Federal Reserve, which controls the money supply is PRIVATELY OWNED, many Americans did not know this until the GFC 2008 collapse when the truth was forced out.

by Yankiwi | 17th Oct 19, 10:09pm 1571303398

Agreed on almost all counts. I'd state that the health care monopoly is a serious issue in US. The federal minimum wage is a joke, although many local governments have made a minimum wage that is over double the federal minimum wage. The high local minimum wage has had some unintended consequences, which is what I am referring to in my prior comment, not the low federal minimum wage. The problem about US health care isn't so much private health care (although that is an issue) but instead the lack of price transparency for health care as well as the extortionist pricing methodology in US.

The unions in US, well, they had functional utility a century ago. In the past 40 years where I had personal visibility into how unions operated, well, they were a hindrance to productivity and personal advancement. I've never been in management, so cannot provide a view from the management or employer perspective. I can state that I would not willingly join any union, and have seen first-hand how unions impede productivity on a personal level as well as on a higher level in the US. Maybe things are different in NZ.

There are certainly many serious issues in US. One of them is the negative effects of union racketeering.

by RickStrauss | 18th Oct 19, 4:04pm 1571367898

Treatment of workers in the USA is pretty abyssal too, now that protections seem to have been eroded over time.

by ddporter | 17th Oct 19, 9:35pm 1571301350

If Unions did not exist, you would be working yes, 12 hour days, SIX days a week and little money and there would be a very rich and very poor.

To prove my point, ask any immigrant from a third world country, they will tell you you as a worker in those countries are NOTHING.
Many New Zealanders , have forgotten the past. Life was hard. No free hand outs, Housing was YOUR problem,

I remember Kiwis only got two weeks annual leave not to long a go. IT was the Unions over the years managed to get it to four weeks leave like Australia. The employers moaned like anything, saying they would go broke , the country ruined. Their DOOMSDAY predictions never happened.
One main reason we have a poverty problem is they took away penal rates, to me if you work weekends and after eight hours you should get
Time and a half, that would help many people in the poverty trap, once again the employers will start their false doom day predictions and some fools will believe them.
NZ had penal rates before 1991,so employers federation cannot say NZ never had them, that would be a direct lie. Australia has penal rates still, why not NZ.

by GV 27 | 18th Oct 19, 7:30am 1571337018

Good yarn, but not many people here are saying unions should never have existed. Various political systems have had good results in some areas; if you overlook the downsides, is fuedalism really such a bad thing? Slavery had good results with infrastructure delivery. Times change.

Funny you mention annual leave; many professionals who had an extra week of leave when the minimum went from three to four didn't get an extra week from four to five. They just got the minimum. Rewards for working hard don't really gel with dragging the floor up for those who don't want to do any more than they have to.

As for penal rates - I'm old enough to remember the shops closing at 2pm on a Saturday. I suspect many places would simply not bother opening weekends if it was going to cost them 50% in labour costs over what it does now.

by RickStrauss | 18th Oct 19, 4:07pm 1571368025

Times do change, and it's important for us to remember nothing stays static. If we do away with too many legal protections that have been won then the pendulum naturally swings the other way. See treatment of employees in the USA now.

Point being that yes, unions won many of the perks we now enjoy, and may be far less necessary in many industries than they previously were, but we need to keep an eye on conditions because they won't stay static and have every likelihood of being eroded based on overseas examples.

by Yankiwi | 18th Oct 19, 10:59am 1571349574

ddporter,

Can you provide me with evidence that it was the unions that managed to get annual leave to four weeks? I spent some time searching via google and all I found were links to government introduced law changes.

BTW, I was surprised and dismayed that NZ doesn't have defined penal rates. Not sure that it would do much for getting people out of the poverty trap, but it would help in some fashion.

by murray86 | 18th Oct 19, 7:43am 1571337785

My union experience is not unlike Yankiwi's, albeit without the uni trip. My early experience included the union demanding ever increasing membership fees, while pay and conditions slowly eroded. Then off to the military. So most of my life i have largely been anti-union, but now back in the civilian world that view is changing.

I believe unions, that is a decent representation of workers is needed. However history tells us that business owners become too predatory, to the point where today pay and conditions are becoming close to a new form of slavery. But we also know that unions become too militant. Yankiwis experience, and there is plenty of other similar examples in the media from across the world is valid. What most don't understand is that owners and workers have a vested interest in a business's success. Yankiwi's experience is of a union working against that, and militant unions generally do too as they don't seem to view the company position particularly well. The company and unions should be working together, not be adversaries.

by Audaxes | 17th Oct 19, 3:06pm 1571277988

The purpose behind fair pay agreements is to create a new mechanism for collective bargaining, setting binding minimum terms at the sector or occupation level.

The CTU has identified security staff, supermarket workers and cleaners as people working in sectors that could benefit from fair pay agreements.

The Employers and Manufacturers Association (EMA) is completely opposed to the idea.

It believes they’ll reduce productivity by causing inefficiencies, reducing flexibility of labour markets and increasing the cost and complexity of businesses’ operations.

“We’re worried that for some businesses, if free pay agreements do result in higher wages, they will simply have to cut down their workforce, or in the case of small to medium sized enterprises, shut up shop,” EMA general manager of advocacy and strategy Alan McDonald said.

Why is RBNZ rate cut "stimulus" not stimulating businesses, so they can afford to pay their workforce? Tax paying citizens have forward liabilities that mount up in present value terms every time interest rates are cut..

No less, the present value of the cash flow of wages is increased by the rate cut, penalizing wage earners indiscriminately. In our conception the cash flow of wages comes about as a result of bargaining whereby the wage earner purchases the cash flow of wages against the delivery of his labor. The purchase price of the cash flow has just been increased by the cut in interest rates. There is no adjustment on labor's side of the bargain: the wage earner is supposed to deliver as before. Link

by Audaxes | 17th Oct 19, 8:48pm 1571298520

Striking sanitation workers decry low pay as company makes millions for Bill Gates

by delboy | 18th Oct 19, 11:19am 1571350788

I mentioned to my young adult kid recently that in the future you may not get to bargain with your employer when you're offered a new job and instead a union will tell you what wage you'll receive.

In typical millennial fashion her reply was "wtf how can a union set the wages, whatever Dad".

by Yankiwi | 18th Oct 19, 3:40pm 1571366441

I hate to say this, but there may be a rude awakening in her future if some projections are accurate.

According to some, her wage should be defined even prior to the job offer and negotiation, and without any correlation to her capabilities to do the job (skudiv, I'm referencing you here).

I'm actually a bit impressed as to her response, as this is a rather positive response that shows a rational understanding as to how things really work. She gets two thumbs up from me, telling off her negative parental unit about the units silly misconceptions. :)