Supermarkets to security: unions say thousands will benefit from new agreements

Thursday, 31 January 2019

A leading union figure says a raft of occupations are ripe for a proposed new form of employment bargaining, with 'many thousands' of workers standing to benefit.

Council of Trade Unions president Richard Wagstaff also dismissed opposition from employer groups to a central element of fair pay agreements, saying the system would not work if it was not compulsory.

On Thursday, Workplace Relations Minister Iain Lees-Galloway released the working group report on fair pay agreements, a possible new tool for workers across an entire sector to negotiate conditions above legal minimums.

A manifesto promise of the Labour Party in the 2017 election, unions have hailed the move as a win for workers, in particular those in sectors where employers compete through lower labour costs.

Workplace Relations Minister Iain Lees-Galloway said the working group on fair pay agreements had agreed on a broad range of issue, but acknowledged disagreement on the central issue of whether employers should be compelled to take part.

* Treasury urged Government to delay creating Jim Bolger-led working group

* Backing of 10 per cent of an industry should trigger nationwide process, working group recommends

* Prime Minister says fair pay agreement development 'has left a bit of a vacuum'

Council of Trade Unions president Richard Wagstaff said while the union movement had not done work on which industries could be targeted first for a fair pay agreement, he believed many could be suitable and that many thousands of workers could benefit.

* Labour's fair pay agreements mark biggest industrial relations change in a decade**

'We think there are large numbers of workers who aren't, essentially, getting fair pay,' Wagstaff - who sat on the working group - said.

'They're struggling to survive, they're working poor, essentially, and the way the labour market works, along with systems of tendering and so forth, keeps forcing wages down.'

A number of sectors, including cleaners and bus drivers, have been touted as being possible targets for fair pay agreements, while the CTU release also quoted a supermarket employee as welcoming the prospect of an agreement in her sector.

Wagstaff said the union movement had not decided what sectors would be targeted, but many were possible.

'We can see lots of places, like supermarkets, like security guards, like bus drivers, there will be numerous more where we'd want to do a proper analysis of are the conditions best for advancing a fair pay agreement.'

Early in Jim Bolger's time as Prime Minister, the National Government passed the Employment Contracts Act, which marked a seismic shift away away from industry bargaining. Now Bolger has chaired a working group which recommends a limited type of industry agreement.

Working group split

The working group report on fair pay agreements was split on a central aspect of the plan, with employer representatives refusing to support the agreements applying to all employers.

The release of the working group report on fair pay agreements confirms that the group, led by former Prime Minister Jim Bolger, had recommended that the support of as few as one in 10 workers could trigger a nationwide negotiation process.

Employers across the country would be forced to adhere to any resulting agreement on employment standards above legal minimums, even if they took no part in the process, a majority of the working group recommended.

Workplace Relations Minister Iain Lees-Galloway welcomed an 'excellent and comprehensive' report, which he said reached agreement on many problems facing New Zealand's economy and how such agreements should be structured.

Fair pay agreements appear destined to be the most contentious labour law reforms of this term of Government.

Lees-Galloway acknowledged the issue of compulsion was central to the debate over the agreements.

'The employers have a clear preference for a voluntary system, and I can understand why that is,' Lees-Galloway said ahead of the report's release.

'The challenge of a voluntary system is how to avoid penalising employers who do the right thing and do pay fair wages and not give a free pass to those who don't want to meet the standards of a fair pay agreement.'

Lees-Galloway claimed that without compulsion, the system may be flawed.

'One of the things employers have been calling for is a level playing field. We want them to be competing on innovation, on the quality of their product, on the quality of their service. We don't want them competing by racing each other to see who can have the lowest wages,' Lees-Galloway said.

'If we're putting in place a set of minimum standards, if we don't have compulsion, there's lots of questions that become very difficult to argue.'

Bolger said if the system was voluntary, the very employers who the agreements were designed to protect workers against would be the ones who would refuse to take part.

Above the minimum

Fair pay agreements, a manifesto promise of Labour in the 2017 election, aim to 'set fair, basic employment conditions across an industry based on the employment standards that apply in that industry'.

The idea is that defined sectors or occupations would reach agreements on minimum standards that should apply to all employers, which were higher than the legally allowed minimums.

The name of the agreements suggests they will focus on pay, however employment lawyers have cautioned that the agreements could cover many types of conditions and could amount to a loss of sovereignty for employers over how they run businesses.

Despite raising questions about fair pay agreements before the 2017 election, BusinessNZ chief executive Kirk Hope

Although it is unclear which exact sectors might be subject to the agreements, the entire working group agreed they would be most useful in sectors 'where competition is based on ever-decreasing labour costs rather than on increasing quality or productivity'.

National has warned they represent a move back towards national awards, where central bodies struck pay deals which applied across the country.

National's workplace relations spokesman Scott Simpson said Lees-Galloway appeared to 'blind to the fundamental unfairness' of the proposals.

In August, Prime Minister Jacinda Ardern said only 'one or two' fair pay agreements would be reached in the current electoral term.

'The idea that one in 10 employees, or 1000 across an industry, can trigger mandatory nationwide employment negotiations is democratically offensive,' Simpson said.

'The Minister will struggle to explain how businesses and workers will be better off under a regime that would be backwards, one-size-fits all and rigid.'

Employers opposed

Before the election BusinessNZ chief executive Kirk Hope demanded Labour give more detail on fair pay agreements.

He would later be part of the working group on the topic and one of three representatives who refused to back the agreements. As the report was released, BusinessNZ warned the agreements posed risks for business and the economy.

Hope said the agreements would impact productivity.

'Being covered by a fair pay agreement would be compulsory for everyone in an industry or sector. We disagree with this and think the decision to enter any employment agreement should be voluntary,' Hope said.

'Fair pay agreements would limit business flexibility, as a collective covering every business wouldn't be able to meet the needs of individual firms. Businesses that wanted [to do] differently would have to negotiate separate agreements on top of their fair pay agreement, and this secondary bargaining would increase the risk of industrial action, as happened with similar rules in the 1970s.

'There would be risks to productivity because everyone would have to attend paid stop-work meetings to agree on their fair pay agreement. All employer representatives on the working group were concerned that about the consequences and costs of this.'

Unions back the move. 'Working Kiwis are a step closer to having fairness at work with today's announced recommendations from the working party on Fair Pay Agreements,' Council of Trade Unions president Richard Wagstaff said.

'New Zealanders deserve jobs that pay enough to live on, with working hours and conditions that allow them to spend time with their families and doing the things outside of paid work that they love.'

A vacuum of uncertainty

For months, the Government has been looking to play down the impact of the agreements.

When Jacinda Ardern returned from maternity leave, in a concerted effort to boost lagging business confidence, she raised the prospect of fair pay agreements as being part of the reason why confidence had fallen. There would be very few agreements in the current term and those which were signed would affect few employers.

Ardern told business leaders that the development of the agreements had created 'a bit of a vacuum' and contributed to uncertainty.

'That's why I am confirming today that there will be no more than one or two fair pay agreements concluded during this term. They will be in industries and sectors that have low pay and in which the workers are vulnerable and regularly exploited,' Ardern said.

'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.'