Ardern tries to calm business jitters around industrial reforms by saying no more than two fair pay agreements will be concluded before the next election

Ardern tries to calm business jitters around industrial reforms by saying no more than two fair pay agreements will be concluded before the next election

Prime Minister Jacinda Ardern is trying to allay businesses’ fears around the major industrial relations reforms underway.

Delivering an anticipated speech on business confidence on Tuesday morning, she indicated new Fair Pay Agreements would be introduced slowly, with no more than one or two of these new collective bargaining agreements concluding during this electoral term.

Asked by media how many she initially thought there would be, Ardern said it was always going to be a small number. “But let’s give that certainty now."

She told the business audience the agreements would first be introduced to industries that need them the most - those with low pay where workers are “vulnerable and regularly exploited”. However she stopped short of specifying these industries.

The Government in June announced former National Prime Minister Jim Bolger would head up a working group to make recommendations on the scope and design of a legislative system of industry or occupation-wide bargaining.

In the face of concerns employers will be required by law to reach consensus with unions on issues like wage increases, even if they don’t want to, the working group will consider the circumstances in which employers can be exempt from an agreement.

And in the face of concerns the reforms will encourage strikes, the Government has clarified industrial action isn’t permitted as part of bargaining over a Fair Pay Agreement.

The working group is due to report back in November.

Ardern took the opportunity on Tuesday to underline the Government’s “cautious and considered approach” towards the reforms.

“They have become the source of a bit of discussion. I understand why – they are common place in Australia, but are not something we have seen on our shores,” she said.

“But taking a considered collaborative approach, has meant that there has been room left for a bit of speculation around what fair pay agreements might do, and whom they might effect. It’s time we drew a line around that speculation.

“I fundamentally believe that fair pay agreements have the ability to be win-win, the chance to create a level playing field rather than a race to the bottom and provide stability to wage setting in an industry.

“They are intended to be another tool in the bargaining toolkit. They are there to address areas where there is entrenched low wages and low wage growth.

“But I can also tell you what they are not here to do. They are not here to fundamentally disrupt our employment relations landscape, and they will not for instance be accompanied by the ability to take strike action.

“But I can say all of that – and the truth is of course, that going slowly on their design to make sure we get it right, has left a bit of a vacuum. I acknowledge that. And I want to do something about it. 

“That’s why I am confirming today that there will be no more than one or two fair pay agreements concluded during this term…

“The vast bulk of you in this room will remain unaffected by these agreements, but you will have a chance to see how they work, the benefits that they bring, and I hope, that some of the speculation around them is unfounded.”

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The Right/Left, boss/worker, rich/poor, enfranchised/disenfranchised scrap, however it is framed, is just that; a scrap over who gets to eat how much of the cake. At it's extreme, its global war. At it's smallest, it's bargaining over a pay-rise.

But it's always about the cake.

Ask our PM how much cake is left? And of what quality is the remainder? And how many are clamouring to eat?

Chocolate or banana cake?

Peak cake I assume...

and ask her how big her piece of the cake is?


Cake is an interesting metaphor,but though useful,it does not tell the full story. NZ's cake is not fixed;it could be made bigger by say,increasing the top tax rate back to 36%,or by increasing labour productivity. This makes the cake bigger,without using more of our ever scarcer resources.
What we cannot do is just keep on growing our GDP-a highly flawed measure as Kuznets well knew-on the assumption that we will continue to have access to natural resources like oil and gas indefinitely. There are Limits To Growth,as the Club of Rome knew a long time ago.

“I fundamentally believe that fair pay agreements have the ability to be win-win, the chance to create a level playing field rather than a race to the bottom and provide stability to wage setting in an industry.

I fundamentally believe that there will be a massive selling opportunity for automation and direct labour cost minimisation measures the second that a 'fair pay agreement' is announced for a specific industry. It will have the ability to be win-win-win, the chance to create a new career for the displaced woikers, the commissions and capex for the sales force, and the new stability in profits for the industry itself.

This is a much more considered 'fundamental belief' based on economics, than the PM passing an opinion of someone unqualified to do so, of what may or may not eventuate.

I like your argument but automation only makes sense at a certain scale of production, something absent across most industries in NZ. For the numerous costs associated with automation to make sense several industries in NZ may remain unscathed from the early stages of Industrial Revolution 4.0. This does not include the absence of talent to set up and run such technology.
My employer works closely with a tech company in Japan that is heavily invested in robotics and AI technology. We have done several market studies on NZ's readiness for such products and services with barely enough response for things to get us capitalists interested.

Agreed, and a good point. Rhetorically, 'Automation Opportunity' is as good a sound bite as the Hon PM's 'level playing field', eh.....

And the bitter irony of wage increases, as the US is discovering, is that they are swallowed up smartly by increased transport, fuel and import costs, especially (duh!) at the very lowest deciles.

And, mais naturellement, the Hon PM has not clarified just which are the 'one or two' Lucky Industries to be put through the IR wringer.....which rather negates the point of the address - allegedly to decrease uncertainty.

The war has been on for some time. Bringing in too many strangers too fast does not work and our elites are responsible. Fortunately for us Europe will have much larger problems which we should be watching carefully.

The elite few running successful world-class businesses are not the ones to be blamed. The house flippers and sweatshop business owners are the ones who are ruining it for us all. The unproductive businesses and unskilled workers are gradually crowding out talented individuals and high value businesses.
An arduous visa process, high cost of living, difficulty to find decent accommodation, insufficient local transportation alternatives are some issues which potential talented migrants find off-putting and choose to move elsewhere instead. We are not alone in the race to attract top talent and we are certainly not winning.

Business owners aren't idiots to be swayed by rhetoric. The govt will be judged on what they do, not what they say. Increasing taxes, increasing minimum wages, increasing constraints on business activities, increasing regulatory dangers, increasing administrative workload and adding more laws and rules to remember and increasing unproductive time for the 100's of thousands of small business owners in this country is only going to see Labour hated, no matter how they attempt to spin it.

We have near record low unemployment. Labour law is demonstrably working well, so why are Labour so intent on breaking it?

We have near record low unemployment so we shouldn't have to be forcing wages up, the market should take care of it, but somehow or other, left alone seems to be able to justify not doing so. In times of low unemployment, workers should be creaming it, but they aren't.

Real wages and minimum wages both went up about 30% under National while keeping near full-employment. Everyone was better off.

Moves to increase minimum wage massively now will just push more people out of work, particularly young and inexperienced. That is incredibly damaging over the long term to prospects of less well educated - if you don't get into work when young you are likely to end up on welfare scrap-heap long term.

Labour are (as ever) pushing this naively reasoned policy through without doing the deeper analysis and thinking about the human damage they are going to do over long term as a result.

Just to clarify, when they say “fair pay” are they meaning people get paid in relation to the value they produce or do they mean something else?

'I don't know what you mean by "glory",' Alice said.

Humpty Dumpty smiled contemptuously. 'Of course you don't — till I tell you. I meant "there's a nice knock-down argument for you!"'

'But "glory" doesn't mean "a nice knock-down argument",' Alice objected.

'When I use a word,' Humpty Dumpty said, in rather a scornful tone, 'it means just what I choose it to mean — neither more nor less.'

'The question is,' said Alice, 'whether you can make words mean so many different things.'

'The question is,' said Humpty Dumpty, 'which is to be master — that's all.' Lewis Carroll - Through the Looking Glass

I don't know what the Gubmint means by 'fair pay'........but I have a Fair Idea who is to be Master.....


Parker and Robertson who dismissively sneered at the survey results appear to be keeping a low profile as our all smiling, all nodding, fundamentally believing PM announces she wants the fair pay agreements to be forced on us in a 'collaborative, win win, level playing field, bargaining tool kit' kind of a way. I feel so much better now and will complete the next confidence survey accordingly.

It may as well be 100. The outcome will be the same - businesses wondering if they will be next. Brainless.

I think Arderns focus on the phrase 'certainty' needs closer consideration, it means business can kiss good bye to the casualised worker exploitation racket...

Exploitation racket? Wtf. My son just finished up at his part time retail job today. The firm couldn’t make money, in part due to the minimum wage so 15 no longer have jobs. He was happy to have 12 hours per week. It is certainly better than what he has now which is nothing, nada, zilch. Great employer. I’m sitting him down to hand write a letter to the owner thanking them for giving him the opportunity to work. They are giving the staff a closing party. My son will hopefully never have the tormented working relationship socialists have with their employers.

Retail is in trouble. Anything small and light that is less than $400 and I'm on EBay. I even buy my vacuum cleaner bags online from China. Many things are freight free. Sure it's not helping local business but why pay up to 4 times the price ?

Absolutely. AliExpress, click Free Shipping. Never let me down yet.

So the business couldn’t absorb a 4 percent increase to their wage bill? Maybe the business owner was just clearing some weeds, can’t make money if people stand around in the stock room yacking all day.

It’s food retail. My son was serving customers with his hours based on expected demand. My understanding is that they had accumulated losses and couldn’t see it improving. My son was amazed he was paid $16.50 per hour. We were grateful the employer gave him his first paid job. Re 4%, I have no idea of the finances but having consulted with debtors in trouble, they often made the same mistake you appear to be doing. In a retail food business the maxim is 1/3, 1/3, 1/3 for ingredients, overhead and profit. Get the ingredients and overhead out of kilter and you are quickly in trouble.

Don't stand at the graveside and weep too much...Its market economics at work right there. Sadly your son has paid the price for a business that had its fundamental assumptions so wrong it couldn't clear its costs. I have been there myself as an employee and it makes one very angry that the business owners make such poor decisions. Worse still having lowly paid labour and subsidies like WFF only cements the culture of under performing governance and low productivity, this is a recognised fact in economies with higher living standards than our own. So the market has efficiently cleared out an under performing business, thats what it is supposed to do. Your son should be able to find another company to work for that is better run and a better bet for the future. As a lower ranked employee, He may well be very aware of how his former employers got it wrong, so perhaps he could team up with his other workmates and make a succesful go of the old model by improving its offering and systems?

My son is at school. I don't think he'll be starting a business any time soon and is aiming at Biotech in the US so is highly likely to be a salary earner for life, in another country. This has taught him a valuable lesson though in market economics.