Fair Pay Agreements not suitable for NZ: report

NZ Initiative says government should reject recommendations made by Fair Pay Agreements Working Group or “face harming economic growth and productivity”.

The New Zealand Initiative (NZI) says the government should reject the recommendations made by former Prime Minister Jim Bolger’s Fair Pay Agreements Working Group (FPAWG) or “face harming economic growth and productivity”.

Earlier this month, the NZI released the Work in Progress: Why Fair Pay Agreements would be bad for labour report, which outlined why the NZI believe the recommendations from FPAWG will hinder, rather than help, the government’s goal of a high-wage economy that shares the benefits from productivity growth.

NZI say the recommendations are “highly undemocratic” and would allow a small minority of 10 per cent of workers in an industry or occupation to impose their desire for collective bargaining on a whole sector regardless of the wishes of the majority.

In his foreword to the report, former union official and company director Rob Campbell welcomed the report as a “well-researched and thoughtful contribution to an important public policy debate”.

BusinessNZ has also endorsed the NZI’s report, saying it agrees that compulsory sector-wide bargaining would not be a suitable system for New Zealand.

BusinessNZ chief executive Kirk Hope said the report accords with the employer views expressed during the Fair Pay Agreement working group.

“Having Fair Pay Agreements centrally negotiated by unions and industry reps would mean businesses losing the freedom to set wage rates appropriate to their own workplaces,” Hope said. “This kind of approach in past years led to wage inflation, higher prices and strikes.”

Hope said the NZ Initiative report identified other policy approaches that would better serve productivity and growth and cost of living issues, including improving education outcomes, addressing housing affordability and continuing to make New Zealand an attractive investment environment.

“As an alternative to Fair Pay Agreements, we would encourage the Government to consider these policy approaches.”

However, cleaner’s union E tū says the NZI has “cherry-picked claims”, ignored crucial evidence, and has not contributed constructively to the discussion on the issue.

E tū national director of campaigns Annie Newman said NZI had “completely ignored the main issue”.

“Tens of thousands of working New Zealanders are living in poverty, working in industries where tendering processes mean a race to the bottom on wages,” Newman said.

“Fair Pay Agreements will set minimum standards to make sure that paying people poorly is not the way to be competitive. It really is as simple as that.”

Newman pointed to the recent Care and Support (Pay Equity) Settlement Agreement, which won equal pay for everyone in the industry.

“Carers in New Zealand won equal pay through an industry-wide agreement, similar to a Fair Pay Agreement. It was negotiated by unions, businesses, and government, and has lifted over 50,000 people off poverty wages,” she said.

“Our priority areas for Fair Pay Agreements are cleaning and security, where it is blindingly obvious that we need better wages and conditions. Any argument against that, especially one that offers no meaningful solutions, doesn’t deserve the attention of New Zealand workers.”

The Fair Pay Agreements report proposes a system of industry-wide collective agreements for New Zealand workplaces, which the FPAWG says “will be most useful in sectors or occupations where competition is driving a ‘race to the bottom’ in terms of wages and conditions.”

In June, the Council of Trade Unions called for cleaning, security and supermarkets to be the first sectors to receive the Fair Pay Agreements.

Council of Trade Unions president said the modern sector bargaining such as the proposed Fair Pay Agreements will lift the pay and conditions across an entire sector, to ensure working people have access to a fair return of the profits made by business, and stop bad employers undercutting people’s wages.

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