BusinessNZ chooses to sit at fair-pay table rather than 'lob hand grenades'

Tuesday, 5 June 2018

The country's top business body will play ball for now with the Government's plan to encourage 'fair pay agreements' across different industries.

A working group announced by Workplace Relations Minister Iain Lees-Galloway and headed by former prime minister Jim Bolger will design a new collective bargaining system aimed at ensuring decent pay and conditions for 'middle New Zealanders' who might earn more than the minimum wage.

BusinessNZ chief executive Kirk Hope and Hospitality NZ chief executive Vicki Lee have agreed to be on the 10-person working group.

Wellington Chamber of Commerce head John Milford, representing BusinessNZ, said it had some concerns 'around flexibility' and ensuring businesses could maintain a strong relationship with their own employees.

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'Of course cost is a concern. We want to ensure all businesses can afford the outcomes.

'The other thing is industrial harmony. We have got to ensure we come out with a solution that is supported by the majority of businesses and employees.'

But having said that, BusinessNZ was 'pleased to be part of the solution', he said.

It was better for BusinessNZ to be involved in the working group than to 'sit on the outside and lob hand grenades in', he said.

John Milford says BusinessNZ will take a seat at the table as fair-pay framework nutted out.

'We will participate willingly and enthusiastically with this body to get the best outcome. If at the end of the day we don't like the outcome, that won't stop us from taking that position.'

Lees-Galloway said he did not think fair pay agreements would eventuate in all industries across the economy.

'We are going to determine the conditions under which we think initiating bargaining for a fair pay agreement is appropriate … but then it will be over to unions and employers in particular industries to decide if they want to initiate bargaining themselves.

'There will be industries where people are satisfied with the status quo.'

If employers and unions in an industry agreed to negotiate an agreement, there would then need to be 'some way of working through an impasse' if they could not reach an agreement, he said.

'Whether it is some form of arbitration or something else, I am agnostic on and that. It is a question I have asked the working group to consider.

'Largely New Zealand businesses are adaptable and we do need to transition our economy to one that is more productive, sustainable and inclusive,' he said.

Council of Trade Unions president Richard Wagstaff acknowledged there were 'a lot of unknowns'.

'But we think this is isn't only good for working New Zealanders, this is good for good businesses too.'

First union retail, finance and commerce secretary Tali Williams supported the central premise of fair pay agreements that they would assist good employers who wanted treat workers better, but who found that difficult currently.

'While some major retail chains negotiate with our union and provide decent wages and conditions they face unfair competition by minimum wage retailers,' she said.

Milford said its members tended to view change suspiciously. 'The key for BusinessNZ is to ensure we keep our members well-informed and up to date and ultimately they mandate us for what we do.'

Canterbury Employers' Chamber of Commerce chief executive Leeann Watson said it was heartened BusinessNZ was part of the working group but was 'not supportive of a national-award type employment regime in New Zealand'.

'We are therefore disappointed the working group terms of reference do not include whether such a system is necessary,' she said.

'The concept of nationwide employment agreements setting minimum pay and conditions for entire industries or occupations is particularly concerning for small employers who may not be able to absorb costs their larger competitors can.'

Gareth Kiernan, chief forecaster at Infometrics, said there were a number of dynamics that would alter how the moves affected the economy.

'Typically, because higher pay rates make labour more expensive compared to plant and machinery, bargaining by unions or regulation by government will discourage businesses from hiring as much labour, encouraging them to substitute away towards capital instead. So any moves in this direction threaten to limit employment growth – even if those who are still employed end up better off.

Iain Lees-Galloway says some mechanism will be needed to broker agreements but little is set in stone.

'However, this view needs to be taken in the context of two other factors. Firstly, we have a labour market that is already relatively tight and is forecast to remain so over coming years. So it seems likely that businesses will need to pay more for workers, anyway.

'Secondly, we're in the early stages of a major shift towards more automation in workplaces and a significant change in the skills required of the workforce. This trend is likely to mean that, if labour costs rise, the increases could accelerate the onset of automation and other technological change.'

He said employees' share of the economy was lower than in the 1970s and 1980s but had increased between 2001 and 2009.

'There's clear pressure at the moment for a shift in the balance of earnings between employees and business, and I suspect this change will contribute towards employees' share of total earnings rising again. However, in the current environment, it will be arguably even more important for employees to ensure they have the necessary skills in a rapidly changing workplace.'