Labour faces tough questions over 'Fair Pay Agreement' policy

Saturday, 26 August 2017

Labour is being pressed for detail on its 'Fair Pay Agreement' policy which business fears could lead to national industry-wide strikes.

Labour's industrial relations election policy says: 'Fair Pay Agreements (FPAs) will be agreed by businesses within an industry and the unions representing workers within that industry. FPAs will set basic standards for pay and other employment conditions within an industry, according to factors including job type and experience.'

It's a policy Labour's Iain Lees-Galloway said was designed to give power back to workers, many of whose pay-packets have not kept up with the cost of living, especially in cities like Auckland and Wellington where rents have been rising fast.

But Business NZ and National's Steven Joyce called for Labour to explain to the electorate exactly how the policy would work, and whether it threatened the prospect of entire industries going on strike should FPA negotiations break down.

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Lees-Galloway said once in power a Labour-led government would spend the first 12 months working out how to implement FPAs.

'We would give ourselves 12 months to sit down with business and unions to look at how the process of bargaining for an FPA would be initiated,' he said.

Other points that had to be thought through included exactly how each 'industry' covered by an individual FPA would determined.

'That's one of the things that need to be talked through,' Lees-Galloway said.

Other uncertainties included how the FPA negotiations process would work, whether arbitration would be used if negotiations failed, and whether strike action might be used during negotiations.

Kirk Hope from Business New Zealand said: 'Pan-industry awards have been part of Labour policy at least since 2011, so it is concerning that there is a lack of detail around how the policy might work in practice.

'The Fair Pay Agreements policy would be the largest systemic change promoted by any party this election. 

'It's important that it receives more scrutiny and debate in the run-up to the election.'

'There would be grave concerns if one of the outcomes of Fair Pay Agreements was widespread frequent industrial action,' Hope said.

Lees-Galloway said: 'The Council of Trade Unions (CTU) have said strike action would not necessarily have to be part of these agreements.

'They don't see strike action as a necessary part of the negotiations for a fair pay agreement. That's something we would want to consider.

'Where agreement can't be reached, going to some form of arbitration rather than allowing for strike action might be a preferable approach.'

Richard Wagstaff, president of the CTU, was angered that suggestions that strikes could follow the introduction of FPAs, and the policy was not a return to nationwide industry-based collective agreements.

'There's no prospect, zero prospect of industrial action from this,' Wagstaff said.

The CTU's proposals did not include a mechanism for industrial action during FPA negotiations, he said.

National's Steven Joyce said concern about the FPA policy had been voiced at business events, but these had not made it to the national media yet.

'The world has changed since the 1970s, when we last had this sort of approach,' Joyce said.

Joyce said industries like manufacturing were no longer homogenous, and were made up of very different businesses, large and small, competing in very different niches, globally and locally.

'I think there would be a very big pushback if Labour were able to get into government,' Joyce said.

Wagstaff said FPAs would be focused on narrow industries, giving the example of bus drivers, where pay and conditions were being forced down as bus companies competed for business in tenders with councils.

Talk of the policy being a return to the 1970s was wrong, Wagstaff said.

Joyce said: 'The desire of Labour is to give the unions the place at the table with the employers and themselves to demand common standards across industries like manufacturing.'

'I don't think they are pushing in the strike direction, but they are pushing in the control direction, which would be troubling for exports.'

Joyce said there were only two possible conclusions from Labour's reticence to reveal the details of its FPA policy.

'One, they haven't thought it through, which is hard to believe, and two … they don't want to talk about it.'

Lees-Galloway said workers had not shared in economic gains, and Labour's polling showed many voters were concerned.

'We know people do feel wages are too low. They are not keeping up with the cost of living,' he said.

'It [FPA] puts a little more power in the hands of the workers to negotiate fair conditions.'

Through FPA negotiations, the public would also get to learn a lot more about the real conditions and pay that workers in certain industries faced, he said.

The FPA policy is one of a number of Labour policies designed to lift the incomes of workers, including raising the minimum wage.

National's policy response to the rise of the 'working poor' is the Family Incomes Package, which includes lifting lower-income tax thresholds, and increases in the accommodation supplement to help pay rising rents.

It also included a focus on continuing to foster a strong economy, Joyce said.

And, he said: 'The evidence that there is suggests that wages are going up a bit faster than inflation.'

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