Unions get their biggest win in decades
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In the same week that the Government announced a freeze on pay for large numbers of public sector workers, it also announced the biggest change to industrial relations law in three decades.
What the Government giveth, the Government taketh away.
The politics – and it does appear to be all politics – of the pay freeze have backfired on Labour. That’s because it is very difficult to go around thanking all the government workers who helped keep the joint going during Covid-19 then turn around and give many of them a pay freeze.
The fact that neither Finance Minister Grant Robertson nor Public Service Minister Chris Hipkins appeared to have any idea how much this initiative would save suggested that it more fits into the political symbolism end of things.
Labour clearly thought this would sound good – and Robertson would be keen on any amount saved – but given that Wellington bureaucrats are a relatively small proportion of those affected, it now just looks a bit capricious.
Sacrifice for Covid is one thing; sacrificing pay hikes for no pressing reason and with little rationale is another.
More than that, it doesn’t affect those paid by grade – such as nurses, teachers, doctors, police, where you move up each year with more experience. Instead, it keeps the value of those grades the same. So it’s all a little difficult to explain and justify, particularly as the Government isn’t putting a limit on how many new public servants it employs.
It’s a bit of a lesson for Labour – which has a sharply ruthless media machine adept at generating good headlines – that being tough on your friends is fine, but there needs to be a good reason for it. Otherwise, its just looking tough for the sake of it.
That was Wednesday. On Thursday, Labour announced its long-awaited – or dreaded – fair pay agreements.
Fair pay agreements (FPAs) are without doubt the most significant structural reform the Government has made so far in this term – and it will be one of the quickest ones to take effect in the real world.
The legislation is expected to be passed by November, with some agreements starting to be negotiated next year.
For Workplace Relations Minister Michael Wood, this change is huge, and something that should be core to Labour’s mission: if Labour governments don’t enact pro-worker labour laws, what are their historical purpose?
He is unapologetic, and comfortable with the fact that National, ACT and some in the business community will campaign tooth and nail to oppose the changes.
For Labour parties around the world that have been paler versions of ‘‘who cares’’ – managerialist deliverologists and ‘‘third way’’ plonkers – Wood’s understated, but determined, statement of values is refreshing.
It’s one of the distinguishing features of Labour from many of the post-materialist concerns of the Greens. The party is, after all, the political wing of the labour movement.
As a result, the unions are understandably happy. It is their biggest win in decades, and has been a long time coming.
People may trenchantly disagree with the changes – and many will; they are radical – but Wood does not resile from what they are. He’s also a fundamentally pleasant bloke, so he is trying not to frame it as any sort of war with business, instead couching it in the language of helping good employers do the right thing.
And the importance of these changes should not be understated. This is the biggest reform of industrial relations law since the 1990s.
Under the new rules, if 1000 workers or 10 per cent of a workforce want to initiate a fair pay agreement, employers will be compelled to conclude one. It will be an agreement that includes all workers, with possible variation for regional differences.
There will be a couple of rounds of negotiations, but if either negotiation or ratification from
more than 50 per cent of both employees and employers (who get a vote for every employee) ends up failing, the Employment Relations Authority will simply make a binding ruling.
During a negotiation period there can be no industrial action from unions, and employer groups can’t walk away from the table.
The open question is what will happen if there is still unrest after a determination is made – or between negotiations. National and ACT reckon the system is ripe for strikes and industrial unrest.
For the Labour Party as an institution, this move is almost as important as it is for the Government. This will massively empower a union movement that has been disheartened and struggling for the past 30 years.
It is now likely that, in the longer term, the institutional importance of the union movement will greatly outweigh its strength in numbers.
And more powerful and structurally important unions can only be good for the Labour Party: as a source of expertise, volunteers and donations. Some union reps will now be negotiating big, national deals.
Business is, in the main, unhappy about this. Instead of simply employing workers on individual contracts, and maybe dealing with a union or two, they will now be compelled to abide by FPAs.
But besides the economic cost of this, employer lobby groups will have to fundamentally change what they are. Make no mistake, this will be centralised wage bargaining, and everyone will have to learn how to do it. BusinessNZ is being given a bit of money to help make that happen, but the organisation would much rather not be doing it at all.
Where the politics head from here really depends on National and ACT. Both have said they will fight this, but Labour feels the time is right. Wood argues that, during Covid, a lot of frontline workers put themselves in danger, which highlighted their poor pay.
National will be trying to run a campaign based on the fact that unions initiating these deals will effectively mean union bosses dictating pay structures in whole sectors.
In the meantime, Wood must just be hoping that no public sector unions line up for an FPA in order to get around the Government’s wage freeze.
The importance of these changes should not be understated. This is the biggest reform of industrial relations law since the 1990s.