There are fears BusinessNZ’s refusal to be a default representative involved in Fair Pay Agreements (FPA) could put some employers on the backfoot when negotiating with unions.
BusinessNZ on Wednesday wrote to Workplace Relations and Safety Minister Michael Wood to decline the Government’s request for it to be funded to represent employers that don’t have their own advocates when engaging in collective bargaining.
The lobby group, which represents over 70,000 businesses that employ nearly 80% of New Zealand’s workforce, said it didn’t want to be part of a compulsory scheme that is “unlawful”, “unfair” and “out of touch with modern ways of working”.
Wood told interest.co.nz he wouldn’t try to nominate another organisation to be a representative of last resort for employers.
Meanwhile, the Council of Trade Unions will be the default representative for employees.
Power imbalance?
Dundas Street employment law firm managing partner Susan Hornsby-Geluk worried the lack of a central coordinating body to represent employers would undermine FPAs.
She said it could be difficult for possibly of hundreds of employers, with differing interests and financial positions, to coordinate with each other.
“It’s going to be very fragmented and there will be potentially divergent interests with no one body trying to pull those interests together,” she said.
Hornsby-Geluk noted employers would be up against unions that are well-coordinated, well-resourced and used to working together to negotiate.
“If there isn’t something similar on the other side of the table there is actually potentially an imbalance of power,” she said.
“There is a real structural issue that now needs to be resolved in terms of how practically these negotiations can proceed.”
If employers and employees can’t reach agreement via negotiation, the Employment Relations Authority will determine the outcome.
Wood expected BusinessNZ’s refusal to be the default representative for employers to increase the likelihood of agreements being determined by the Authority.
Asked whether he believed this would disadvantage employers, he said, “That might be something that some employers have a view about.”
Hornsby-Geluk characterised the Authority as an ambulance at the bottom of the cliff in the FPAs scheme.
BusinessNZ’s move unsurprising
BusinessNZ’s employment relations manager Paul Mackay didn’t believe his organisation would be particularly well placed to represent employers anyway, as BusinessNZ fundamentally isn’t in the business of negotiating employment matters for employers with industry-specific needs.
Mackay believed industry groups wouldn’t be well equipped to do this sort of work either, hence the reason he saw the whole set-up as a lose-lose for employers.
He maintained the Government would've had a fair idea, ahead of Wednesday, that BusinessNZ wouldn't want to be part of the FPA set-up.
In May, BusinessNZ publicly voiced its opposition to FPAs, saying, "BusinessNZ had engaged with the Government and unions in good faith in dialogue about the FPAs plan, but the problems raised by BusinessNZ had not been addressed, and business could not support the plan to implement them.”
A bill to enact FPAs is expected to pass next year.
Council of Trade Unions reiterates its support for FTAs
The Council of Trade Unions issued a statement on Thursday morning. But rather than address the issue of BusinessNZ’s lack of participation, its president Richard Wagstaff detailed why the Council supports FTAs.
“Just as we have a minimum wage in New Zealand, FPAs will provide a statutory minimum,” Wagstaff said.
“There will also be an ability to vary agreements regionally, to reflect local economic conditions. All firms will still be required to negotiate individual or collective agreements with their staff and in the process be free to negotiate with their employees for anything above this baseline.
“An FPA simply provides a minimum floor on core conditions to prevent the race to the bottom we currently experience…
“FPAs have always been envisioned as being applicable to workforces around New Zealand and in every sector of the economy. But they will only start if at least 10% of the workforce or 1,000 workers actively request such an agreement. We expect that at the commencement only a few workforces such as Bus Drivers will want to start the process of such negotiations.”
FPAs were also debated in Parliament on Thursday, as per the video below.
For more on the nuts and bolts of how FPAs will work, see this story from May.
46 Comments
Mindlessly stupid comment based on a cartoon like perspective of unions. The Employment Contracts Act destroyed the power of unions and entrenched employer power, as it was intended to do. If employers are now struggling to find staff, they might need to take a good hard look at their employment practices.
Indeed I was. And ordinary people then could save to buy a house because labour had a better share of what an enterprise produced than is the case today. Capital has now grabbed a bigger share through engorged management salaries and share allotments than the people who produce the actual value of an enterprise, compared with the 1970s. Now the worm threatens to turn, and entrenched interests like Business NZ will fight tooth and nail to protect their greed, denying their workforce a fairer share (which did exist in the 1970s, due to a better balance of interests). But the greed of the business owners and management, aided and abetted by conservative politicians, screwed the scrum with a blatant power grab via the ECA. Check out the relative share of capital and labour today, compared with the 1970s to see the cumulative impact.
Yes assumptions are dangerous.
From this very site a week ago:
"Workers are winning a larger share of the economic pie"
https://www.interest.co.nz/public-policy/113609/over-fifty-year-sweep-o…
The answer to the fat cats of capitalism is not the fat cats of unionism. Unions achieve nothing for the little guys.
Nzdano,
"Unions achieve nothing for the little guys" Only someone with absolutely no knowledge of history could say that. Employers did not give employees decent working conditions out of the goodness of their hearts. The early unionists had to fight-sometimes literally- for everything.
Just take a little time and look at the working conditions in say the UK in the 19th century and well after that. Just find out a little about the appalling working conditions in the mines and in shipyards.
On the other side, I lived in the UK when union barons almost brought the country to its knees, so I don't want to see ever again. I do want to see a situation where both employers and unions co-exist to their mutual benefit.
to prevent the race to the bottom we currently experience…
Employers are climbing over each other to get good staff. I've seen mid-management offered up to $60k to leave and partner / executive level at up to $200k, it's that desperate. Hardly a race to the bottom and it's only just beginning. Many Kiwi employees still haven't realised the bargaining power they now have.
Good luck applying this to sectors like IT.
And hello, unintended consequences. Raise wage costs, raise prices to maintain margin.
And because an FPA is sector-wide, all affected employers can raise them prices in unison without fear of cartel accusations. Yer Honner, t'was the FPA made me do it.....
It's a classic Universal Pricing Signal.
Interesting. collective bodies are collectively extracting themselves from this government, any involvement in any negotiations, and its bureaucracy because simply, the government is not trustworthy. First of all the Motor Trade Association, now this article and then more dramatically elected local government, the three waters. And then the high court, Mr Tamihere, Mr Bolton, and loins being girded in high circles over the new powers of enquiry snuck through for the IRD. Perhaps this government has just learnt that actually they are not a dictatorship. They are not above the law thank god. Huge backdown, about face, on three waters just announced. Yes another bloody announcement, but this time a good one methinks. What a bunch of incompetent clots in my opinion.
I worked, mostly as a manager/company director, with unionised workplaces & staff for 40 years. Unions are always quite happy for bad workers to be paid the same as good ones, in fact they insist on it. The good ones are then dragged down to the lowest common denominator wondering why they bothered. However the dirty little secret is that it also suits large employers to have unionization much more than smaller ones because their usually significant Labour costs are then mostly fixed & predetermined for budgets.
So the workers in say Dunedin or Invercargill will be better off as wage levels will be set for Auckland? Or is it the other way round? If a middle of the road settlement is reached the workers in Akl will probably be underpaid and those in Dunedin or Invercargill overpaid.
Seems a recipe for strike action with a whole sector downing tools.
It appears to me to be a back door way for increased union membership.
Not in favour of it.
We absolutely cannot go back to those terrible days when workers had power. The living hell of 1% unemployment, houses you could afford on a single salary, rural towns with jobs, and kids leaving school knowing they could start a job with training and benefits from the get go.
I started full time work in 1972, age 16. Before I accepted the first job I applied for & was offered, I asked for a 15% increase ($5/wk) because i thought I deserved more ! :)
However, I then watched the whole country turn into a command/control economy at the increasingly desperate & despotic whim of the Govt & go slowly broke over the next decade as the world moved on without us. Wage/Price/Rent freezes, massive income taxation disincentives - I paid 50% tax on anything over $100/wk, house price inflation, mortgage interest 15-20%, Sheep Retention Rorts (Schemes)... the endless list of Tariff protections for the few paid by the many...
The past is a foreign country; sometimes it was a fools paradise.
Aye it was a small town nation, nationwide then and Muldoon not only saw no reason for change, he forbad change. NZ is still small but not as remotely small as then. Today’s high speed tempo, power of communications, private & public, has afforded newer generations little inclination to consider what has gone before except to correlate unrelentingly without any concession, what negatives have been forthcoming therefrom.
23% Tax + 12% Student Loan + 3% Kiwisaver Min. (proposal currently to increase this to 10% by law) + Employer contribution you aren't getting in your paycheque + Proposed SUI?
+ GST on what you have left when you spend it.
This is the realty for people who do not qualify for family assistance, before you get into a) Wages that don't keep up with inflation and b) tax brackets that are not adjusted for inflation.
So yea, compared to ten years ago, when the tax brackets were last meaningfully adjusted, a bunch of people will be getting pretty damn close to 50% from gross to what you actually get when you spend that money and incur GST. Welcome to the middle. Enjoy the squeeze.
Pedant's note:
Student loan repayments are...repayments of a loan for an optional expense. Yes a degree is increasingly required for one's future success, but that's like trying to claim mortgage payments as tax.
Likewise Kiwisaver - voluntary, albeit increasingly necessary, payment. And you get it all back, with interest, at the end - it's savings, not a tax.
"Student loan repayments are...repayments of a loan for an optional expense."
A degree is required if you're trying to enter a profession with a professional membership requirement that says you have to have one. Sometimes it's those formerly-comfortably middle-class professions that meant you could service a mortgage on one income, and funnily enough, tertiary education was a lot cheaper then too.
The Kiwisaver reform proposal is to remove the voluntary aspect of Kiwisaver and forcibly lift rates to 10%. Nothing optional there.
The ability to view Kiwisaver as an investment is not a tax largely depends on how much disposable income you have. I'd suggest fewer and fewer people have that luxury, and even less at 10% compulsory + the proposed SUI levy. Also not optional.
And yet still, neither are a tax. I don't know about the KS reforms, which sound dodgy af going by what you've said, but the student loan remains an optional expense. You are not mandated by government to obtain a student loan, and a degree can be obtained without a student loan (more rare these days, but still possible).
KS is best described as enforced savings. Again, you get it back, plus interest, and the more you put in the more you get back. I throw a metric buttload at the IRD each year in tax but get far less in return - I have private healthcare, my children attend private schools, and so on. I pay far more tax than two people on half my income, despite my spouse being unable to work, as the IRD does not allow income splitting. I do not complain though, because I'd rather be in the position of having to pay a lot of tax than in one where I'm relying on others to pay theirs for my health and education.
Well I hope Fair Gross Profit Agreements are on the agenda too.
If not supplier industries / firms that sell labour to monopoly price setting industries like supermarkets, insurance companies, fibre infrastructure, construction etc have no way to increase prices, so service will dive, firms will close, the price setting monopolies will vertically integrate (and say it was necessary because service is clearly sub-standard) and then charge what ever they want to the end user.
... that was exactly the point made by Kirk Hope in an interview with Mike Hosking on New Stalk ZB , Thursday ...
Basically : business has given up on this government , and is gonna wait 2 years until they're booted out , and some ministers with commonsense & a positive , constructive mentality are installed ...
... Ardern has become leader of the brain dead ...
I have a pathological hatred of unions after being dumped on by Finsec, twice, in the late '90s/early '00s.
The first time my department (IT helpdesk, relentless shift work) was told to stop complaining because we were "paid enough already" so we all left as one and instantly received a decent pay rise since we were no longer constrained by the collective agreement.
The second time my department (IT dev) was wooed by the union with promises that things had changed and every member was valued, only for them to completely ignore us once they could count us as members. We left immediately.
Fool me twice etc.
This is utterly stupid nonsense from a 130 years ago, another Labour fantasy.
The modern economy in 2021 and the related employment environment is now incredibly diverse and incredibly complicated compared to the simplicity of the past. Today’s employers are acutely aware of necessary remuneration, benefits and flexibility required to recruit and retain good employees.
Putting aside the granting of enormous power to unions and their unsavoury practices, allowing these people to impose blanket employment conditions across industries from Kaitaia to Bluff will be disastrous for employment relations, productivity, and the country overall, it’s just nuts, .
Well maybe they should implement some kind of law set that tips the balance in their favour.... Oh hey, that's right, that's what's happening here.
The reality is that any job where people are attracted to it through a compassionate streak, and can be done without upper decile intelligence (doctors etc) invariably attracts a lot of good people, who end up getting paid less than they are worth, Teachers, Nurses, Police, Zoo workers, Childcare, Care workers etc.
When a bunch of good people, are drawn to a career for a motivation that isn't money, capitalism will reduce the amount they get paid (supply/demand etc) - I think it's perfectly appropriate for laws to be made to deliberately tip the scales in their favour.
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