Pay Bills

Mixed reactions as Fair Pay Agreements Bill is introduced in Parliament

The response to the introduction of the Fair Pay Agreements Bill is mixed – while some welcome the move, saying it will benefit workers, other business groups are calling for it to be canned.

Under the bill, employees will be able to compel their employer to negotiate pay and working conditions if at least 10% of their workforce or 1,000 employees have agreed.

The bill also authorized a “public interest test”, meaning the threshold did not need to be met if there were systematic employment problems in that sector. This could include low pay, low bargaining power, lack of salary progression, long hours, or contractual uncertainty that has not been adequately compensated.

It was hoped that the proposed law could “improve labor market outcomes in New Zealand by enabling employers and employees to collectively bargain minimum industry or occupation-wide terms of employment”.

National leader Christopher Luxon has said if he were prime minister he would scrap fair pay deals.

“Fair wage agreements are a complete leap from the 1970s. They cause rigidity. I think people, in a modern workforce today, want massive amounts of flexibility.

“These deals won’t give them that.”

Meanwhile, ACT’s David Seymour likened the bill to “compulsory unionism”.

“We have a cost of living and productivity crisis in this country. You’re not going to solve that by making people’s jobs more bureaucratic.”

The issue was raised in Parliament on Tuesday afternoon.

Luxon asked the prime minister what his government was doing, as the cost of living soared, to help ‘the squeezed middle’ who weren’t eligible for help like work payments for families.

Jacinda Ardern said the government has already taken measures such as reducing their fuel excise duty and road charges by 25 cents per liter for three months.

She says changes to the family tax credit from April 1 would also benefit more middle-income people.

Luxon then asked, “Why does the average Kiwi work an hour to earn what the average Australian earns in 45 minutes?”

Ardern replied: “Because of the productivity issues we have, and that’s exactly what fair pay deals are.

“Welcome, welcome, Mr. Luxon, to the Labor Party.”

Luxon then claimed that the finance minister had stopped talking about productivity.

Ardern said she invited Luxon to meet with the Minister for Workplace Relations, “because it looks like he may have a more favorable view of fair wage deals than he thinks.”

Seymour later chimed in: “Can the Prime Minister explain to New Zealanders how his policy of putting large groups of workers under the same contract will make them more productive, i.e. produce more so that they can bring in more?”

Ardern said Seymour neglected to recognize that, for some people, that just meant their pay rates were simply increased to match what some in their industry were already receiving.

“It is a recognition that there are sectors where there is a race to the bottom in terms of wages and conditions. It creates a more level playing field.

“It means you will see innovation in certain sectors where instead of looking for cheap labor, we will see innovation and improving productivity,” she said.

Workplace Relations Minister Michael Wood said fair pay deals in 2021 would “improve wages and working conditions, while helping to support our economic recovery”.

“For too long, New Zealanders working in critical roles like cleaners, supermarket workers and bus drivers whose work was essential to keeping our country running during the pandemic, have been undervalued by our system of relationships in the workplace,” he said.

On Tuesday, Wood said the agreements “have long been part of our broader work program focused on raising wages for low-to-middle income people – ensuring better wages for employees is even more essential now that we are beginning to feel the global economic pressures caused by the war in Ukraine”.

“We recognize that a balanced approach is needed and have designed Framework Partnership Agreements to allow trade unions and employer associations to negotiate together to establish minimum standards for all employees and employers in an industry or of a profession.

“These negotiated, sector-specific minimum standards can take into account business costs and opportunities while ensuring that more workers receive higher wages and better employment conditions.”

The E tū union said the proposed law change would provide “a regulatory basis for setting wages and conditions across entire industries, through negotiations between employers and workers through their unions.”

Rosey Ngakopu, an E tū member and security guard, said the proposal was “not just about salary”.

“In our industry, guards also need FPAs to make sure we have the right conditions at all levels.”

Retail NZ chief executive Greg Harford said FPAs would eventually drive up costs for consumers.

“The bill is designed to drive up costs for businesses, and cost increases will likely be passed directly to consumers,” Harford said.

“It will just add an additional burden to the inflationary pressures the economy is facing.”

Business NZ chief executive Kirk Hope said the bill “should just be canned”.

“The regime would make it mandatory for companies to participate in collective bargaining, and mandatory for them to accept union demands or imposed arbitration,” Hope said.

Business NZ would also not accept $250,000 a year from the government “to support mandatory trading in key sectors of the economy”.