Fair Pay plan ‘unnecessary’
The Government’s decision to put centralised wage bargaining at the heart of industrial relations law is unnecessary, says a hospitality operator.
The new Fair Pay Agreement system, announced yesterday, allows unions to negotiate on an industrywide basis, putting a floor under wages.
If 1000 workers or 10 per cent of a workforce agreed, a legally binding agreement setting out minimum pay and conditions across an entire sector can be put in place. Agreements would cover both union and nonunion employees.
Trinity Group managing director Jeremy Smith, also president of Hospitality NZ, was surprised at the announcement, and opposed the system.
Trinity Group owns a hotels, restaurants and bars, and employs 100 to 120 people.
‘‘In all honesty, we believe it’s unnecessary – there are mechanisms to look after staff, especially in an environment when skilled people are in short supply,’’ Smith said.
With borders tightened because of Covid-19 and a big drop in short-term working visas, there was a shortage of people who would normally fill positions such as cleaners and duty managers.
‘‘Supply and demand will create an environment where people don’t need to negotiate for pay,’’ he said.
In the hospitality industry, 40 or 50 per cent of workers were pursuing a career in the sector, and for the rest, such as students or tourists, it was a gap filler. The system would potentially push some of those people out of employment, and create artificial wages, he said.
‘‘We’ll start creating unrealistic pay scales that force businesses to say we’re going to have to do without some of those people.
‘‘Hospitality is a low margin business, we’re operating somewhere between 3 and 10 per cent ebitda (earnings before interest, tax, depreciation and amortisation), there’s not a lot of room to move.’’
Smith was surprised the Government had made the decision.
‘‘I had hoped there’d been sensible discussion with the Government. There’s no real benefit apart from keeping some of the unions happy, and there will be a lot of unintended consequences.’’
People in the industry earned not far below the average wage, and people enjoyed the flexibility while they were studying, for example.
A number of companies did not expect to be affected by the change.
Mainfreight managing director Don Braid said the company paid well above any minimum or living wage level.
‘‘I’d like to think we’re well above
‘‘There’s no real benefit apart from keeping some of the unions happy, and there will be a lot of unintended consequences.’’
Jeremy Smith Hospitality NZ president
fair pay [levels]. We’ve adopted a strong culture at Mainfreight of sharing profits very well and fairly.’’
Young graduates started at $60,000.
‘‘It’s not minimum wage territory.’’
Marty Verry, chief executive of Rotorua-based timber company Red Stag Timber, said businesses that looked after their people and shared their success would not need unionised negotiation.
‘‘In Red Stag’s case, we have a very close relationship with our staff, we look after them well, we have a bonus scheme and as a result there’s not a lot of demand for unionisation or collective action,’’ Verry said.
‘‘Personally, I don’t see the need in our case, but in other sectors there might be people not being looked after well enough, so a group might band together.’’