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Govt to 'take time to get it right' on new wage proposals

The government's tri-partite working group on a new system of Fair Pay Agreement national wage bargaining has agreed a broad framework, but employers are baulking at a proposal to require all workers in a sector or occupation to be represented by a union in FPA negotiations.

Employment Relations Minister Iain Lees-Galloway released the report of the FPA Working Group at the Beehive this morning, although key details were leaked by the National Party last week.

Employers could offer individual contracts, which have become commonplace since labour market deregulation in the early 1990s, once an FPA was agreed, but only if the terms and conditions were better than the FPA's.

"Most of the group agreed that to achieve the government's objectives, all employers in the sector or occupation should be covered by Fair Pay Agreements," says the report.

"Employer representatives participated actively and constructively in the process and can agree with many of the recommendations and design features of the proposed FPA system. However, they advised the group they cannot support the compulsory nature of the system for employers as currently defined."

Lees-Galloway said in a statement "the government will take time to consider the recommendations" and would "take time to get it right". The statement was reissued after an earlier version struck a more triumphal tone.

"The coalition government has committed to improving incomes and working conditions for New Zealanders, focusing first on the wages and conditions of those who earn least," Lees-Galloway said. He cited the need to act given a "race to the bottom" mentality in some industries where "employers who pay their staff a fair wage are being undercut by competitors paying below a fair rate".



Legal minimum standards are the only current guaranteed protection for workers, with the working group report showing how workers covered by a collective agreement plummeted from among the highest in the OECD, at over 70 percent of the workforce in the early 1990s, to one of the lowest, hitting 15.6 percent in 2016.

Of those, "approximately 10 percent of those who claim to be covered by collective agreements" do not belong to a union.

The report says the FPA system will need to consider "how to assess and mitigate potential negative effects, including to competition". It also noted that FPAs "may not be a necessary or useful tool in some sectors or occupations".

The report dwells at length on the range of employment relations models that exist among OECD countries, with "no one-size-fits-all" design available for New Zealand.

"Care needs to be taken too in selecting the most appropriate pathway for a given country."

"The OECD recommends a model of combined sector and enterprise-level collective bargaining because it is associated with higher employment, lower unemployment, a better integration of vulnerable groups and less wage inequality than fully decentralised systems like ours," the report says.

FPAs were most likely to succeed where they "focused on problems which are broadly based in the sector", where both employers and workers are likely to gain from the arrangement and all parties are well-represented, and "where it is connected to the fundamentals of the employment relationship: the exchange of labour and incentives to invest in workplace productivity-enhancing measures such as skills and technology".

While the report acknowledged that New Zealand workers' wages have risen at a faster pace than the rate of inflation during the past 50 years, they have not kept pace with improvements in productivity, suggesting capital investment in new technology has been more highly rewarded than work.

Chaired by former National Party Prime Minister and Muldoon-era Labour Minister Jim Bolger, the working group comprised trade union, employer and academic representatives, with FPAs aimed primarily at low-paid occupations.

The working group proposes two ways for an FPA to be triggered, including the ability to require by law that an FPA be negotiated in sectors or occupations "where there are harmful labour market conditions", irrespective of whether workers in that sector have sought an FPA.

Where workers want an FPA, they will be able to trigger negotiations for a national collective agreement when either 10 percent or 1,000 workers, whichever is the lesser, seek one. That process in itself will require negotiated identification of either the affected occupation or industry.

Strikes would not be permitted in support of an FPA claim under the working group's proposals.


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