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Changing Dynamics of Trade Unions in New Zealand

"Changing Dynamics of Trade Unions in New Zealand and the Impact of the Employment Relations Act 2000"

by Alasdair Thompson, chief executive. Employers & Manufacturers Association (Northern)

Speech to HRH Princess Anne, Commonwealth Study Group Tour (20/10/2003)

Others to address to the group were Secretary of the Engineers Printers and Manufacturers Union Andrew Little, and ACT MP Deborah Coddington.


The ER Act 2000 made it compulsory to join a union if an employee wished to be a part of a collective agreement. However, most New Zealand workers, and especially those outside the state sector, choose not to join unions, preferring instead individual employment agreements with their employer.

Hence the role of unions is somewhat limited by the fact that only the 17.6% of New Zealand workers in collective agreements thereby have to join a union. In the private sector around 90% of employees choose not to join a union.

So, did the ER Act 2000 make a lot of difference? Did it enhance the role of unions?

Well, yes, it did make some difference.

For a start, one employment lawyer recently wrote that 13 of his company clients moved their operations to Australia, with consequential job losses here. Why? Because like most private sector employers they had no stomach for a return to collectives, nor union workplace 'stirring', and that's where they feared the unions and the new government was heading.

Putting that somewhat knee jerk reaction aside, the percentage of the workforce that is not union members has changed very little. In March 2001 it was 17.7%, and in March 2003 it was fractionally lower at 17.6%, a far cry from the 30% maximum level predicted by our Minister of Labour, despite the fact that the ER Act's main plus for unions was the right of access they got to recruit members, which previously required the employer's permission.

The problem for the unions, as I see it, was that they have not been able to add much, if any value to their members in return for the membership subscription fees they charge.

Their members expect better pay and conditions exclusively for themselves as union members, but it doesn't work like that. Unfortunately for the unions, individual workers do not generally appreciate their role in influencing public policy outcomes.

In response to the large majority of workers preferring not to join unions, the government is considering ways to make what the unions, and the Minister of Labour call "free loaders", ie most workers should pay a bargaining agent's fee to a union even if they do not join the union. In other words, for all intents and purposes, a return to compulsory unionism. This won't work either, because the government would lose far too much of its reasonably broad voting support if it tried such a move.

Employees who wanted to be in a collective agreement, but not a member of a politicised Labour Party supporting union movement, should be able to set up their own in-house unions purely for the purpose of negotiating their collective. They, like far and away the great majority of New Zealand workers, do not want to be political activists nor pay to support traditional unions. Again, the proposed move to make it legal for unions to strike for political activist reasons is, in my view, likely to increase workers' resolve not to join politically active unions.

Leading up to 2000, the unions lobbied hard for the concept of "good faith" in employment relations and much was made of that, but the decision of Baguley v Coutts Cars at the Court of Appeal found the new ER Act simply reinforced the obligations of good faith that pre-existed. So again, nothing much new there.

In fact, there is no evidence at all that the unions, for whom the ER Act 2000 was implemented, have influenced any great change at all, and particularly towards "building and maintaining productive employment relationships as part of the government's broader strategy for a more productive and equitable society and economy", to quote Minister of Labour, Margaret Wilson.

Actually, it was under the Employment Contracts Act 1991 that days lost from strikes and stoppages reduced dramatically and now under the ER Act 2000 are increasing again, albeit slowly.

The only evidence of change I'm aware of from studies since 2000 is that the ER Act 2000 has had no impact whatsoever other than the requirement to provide employees with written employment agreements. Some employers are reporting a degree of belligerence on the part of a minority of union reps.

The NZ Journal of Industrial Relations also surveyed 639 businesses finding 5% of employers had found the Act to have been positive, 28% said it had been negative, and 56% said it had had no impact.

I think the potentially negative impacts were mostly removed from the ER Bill before it became an Act. The two good things that came from it have been the government's free mediation services and the no frills Employment Relations Authority. The 28% of employers finding it to have had a negative effect are probably referring mainly to the way some union representatives conduct themselves under their free access rights, and in some cases hinder negotiations rather than expedite them.


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