Opinion divided over labour law overhaul

Business leaders say the Government’s radical overhaul of New Zealand’s labour laws will be ‘‘hugely problematic’’ for the business community, but unions say it doesn’t go far enough.

The policy package, announced yesterday, will supercharge the institutional power of unions and place centralised wage bargaining back at the heart of industrial relations law.

The new Fair Pay Agreement system is explicitly designed to put a floor under wages by allowing unions to negotiate on an industry-wide basis. If 10 per cent of a workforce, or 1000 workers agree, a new Fair Pay Agreement can be enacted.

The agreements will cover all workers.

The Government argued such a scheme was necessary to stop a ‘‘cowboy effect’’ where employers who treated employees badly undercut their competitors on price and force wages down. It was also concerned that wage increases had not kept pace with increases in productivity in some sectors.

Both the New Zealand Council of Trade Unions and BusinessNZ would receive

$250,000 for the next three years to support their role in coordinating and raising awareness about Fair Pay Agreements and the bargaining process.

Sectoral unions could also receive

$50,000 to help with the costs of bargaining. ‘‘Industrial action cannot occur during Fair Pay Agreement negotiations,’’ Minister for Workplace Relations and Safety Michael Wood said in a statement.

‘‘Fair Pay Agreements will help good employers by stopping the race to the bottom we’ve seen in various industries and encourage competition that isn’t based on low wages, but on better products, services, and innovation.’’

But BusinessNZ, the peak business sector body, said the deal was unfair and amounted to compulsory, nationwide agreements.

‘‘This is against international law, which says collective agreements should always be negotiated voluntarily,’’ BusinessNZ chief executive Kirk Hope said in a statement.

It was a dangerous new system that would lead to disputes and strikes, and the plan should be terminated, he said.

Fair Pay Agreements were a part of Labour’s policy platform leading into the 2017 election. It was unable to get them across the line in the previous coalition Government under previous minister Iain Lees-Galloway, who resigned before the election after having an affair with a staffer.

One of the explicit goals of the new regime was to increase the bargaining power for employees, which the Government believed had been insufficient.

The new changes were closely based on the Australian Fair Work Act which was introduced by the Rudd Government in 2009.

‘‘This is what working people in unions have been campaigning for; a more balanced employment relationship between working people and employers – putting people back at the centre of employment,’’ NZCTU president Richard Wagstaff said in a statement.

The Government also planned to eventually set up a new institution, similar to the Australian Fair Work Commission, to arbitrate over any disputes and also provide general governance over the new system.

Paul Watson, southern regional secretary for First Union, said the legislation was ‘‘a good first step’’, but did not go far enough.

‘‘It’s not the big revolutionary change that people are making it out to be.

‘‘I would like to see a far more regulated environment’’.

He said the law changes would adjust the current ‘‘inequitable’’ legislation.

However, he disliked that the changes would still allow settlements to be slow, while removing workers’ right to strike.

Leeann Watson, chief executive of the Canterbury Employers’ Chamber of Commerce, said the changes would be ‘‘hugely problematic’’ for the business community.

‘‘The introduction of FPAs really goes against the country’s progressive employment environment, effectively taking away the rights of employers to set their own wages, which will be hugely significant for the business community.’’

Watson said the move could force some newer, smaller firms out of business, reduce competition, productivity and growth, and would destroy contracting.

It could also trigger a ‘‘wage-price’’ spiral as seen in the past, she said

‘‘This really goes against everything we are trying to do for employment in this country, which is to create a progressive, enabling, supportive environment.’’