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Wilson Speech: Employers and Manufacturers Assn

Margaret Wilson Speech: Employers and Manufacturers Association (Northern)

Thank you for inviting me to speak to you today about issues within my portfolio impacting on business.

Every business wants to succeed and grow, and these goals are also shared by government. This Government is committed to growth and innovation. Our vision for this is built on a foundation of a fair and equitable society and economy.

To help forge such a society and economy, the Government sees a key role in promoting a healthy business environment consistent with its social and economic goals.

However, I should note, there is no set or preordained role for this. New Zealand has seen its fair share of differing models for government involvement in the business environment.

Before the mid 1980s, you could say that there was a paternalistic relationship. Through import quotas and various forms of licensing, the government virtually guaranteed business a market - and a profit. It then started telling business exactly how to operate in that market - the prices it could charge, the wages it had to pay, the hours it could operate, how it could transport its goods and so on.

Then in the 1990s we saw the other extreme where there was virtually no relationship between government and business. Governments made a virtue of having nothing to do with business.

The fact of the matter is, however, that all governments do affect business in some way, regardless of any purported 'hands-off' approach. The government sets tax rates, it provides much of the infrastructure businesses need, it negotiates trade agreements and defines the rules around the use of labour and for environmental protection.

With this in mind, the precise role a government plays is influenced by the conditions of the global and domestic business environment. The new age of business is dominated by incredibly fast and mobile finance, and by a much freer movement of capital, labour and trade. This effect is even more pronounced in a small country like ours.

These two factors mean business cannot - and should not - be micromanaged by a central government. However, it is important for business to form an effective working partnership with government if the respective goals of each are to be fully realised.

In particular, and of relevance to my portfolio as Minister of Labour, a high value and sustainable economy must be underpinned and supported by decent labour standards and healthy employment relationships. Without these things, sustainable economic activity cannot flourish. Further, a business itself cannot excel unless its workers are positively affected by a good working environment.

The Employment Relations Act

The Employment Relations Act is the centrepiece of the employment relations framework. It is premised on the notion that the quality and quantity of our human capital must be the basis for a strong and successful economy. .Relationships that function well and efficiently are based on mutual trust, confidence and fair dealing. Successful relationships are also about parties investing in each other - the worker investing energies in the firm; the employer's investment in workers' training, development and providing opportunities for growth.

I believe the best way to promote and manage such investment decisions for the best returns is a collaborative and collective approach involving employers, unions and workers.

As you will be aware, this year the Government has reviewed the Employment Relations Act.

We have identified a number of areas where improvements can be made to the Act to achieve its objectives. For instance, the incentives in the Act for the settlement of collective agreements are currently relatively weak, and unions face significant practical (and some legislative) barriers in organising workers collectively - particularly in multi-party bargaining.

Further, some behaviours may also actively undermine collective bargaining and settlement of collectives - in particular the practice of employers automatically passing on collectively bargained terms and conditions to workers employed on individual agreements, also known as "free riding".

And, concerns have also been raised about the impact that certain types of claims, and some practices by parties, have on the effectiveness and efficiency of the problem resolution processes available under the Act.

The review, therefore, has focused on areas where the Act can be strengthened to further promote fair and productive employment relationships. This review is almost complete, and announcements on the outcome will be made shortly.

For now, I would like to talk about how good faith collective bargaining assists in a productive and profitable business.

In the first instance, by promoting collective bargaining, the Act acknowledges the need for today's businesses to work in different structures to suit their own needs. The Act gives the parties the responsibility to work out what type of bargaining is appropriate. The freedom enjoyed by workers and employers to tailor their employment relations to their needs is essential to keep a business growing and expanding.

Parties will, of course, have different expectations and may want different forms of employment agreements. For instance, a multi-employer collective agreement between two firms may not be considered appropriate - one firm might be more innovative and growth-focused than the other, and that firm may not want to be tied to the other. On the other hand, two firms with similar outlooks in terms of their strategic direction may see great benefits with a multi-employer agreement.

By the same token, workers may have different positions when it comes to deciding what type of bargaining arrangements are best for them - a group of workers may want to bargain collectively, whereas other workers might feel it is in their best interest to have individual agreements.

When considering what type of bargaining arrangement is appropriate, it is important employers and workers listen to each other's perspective and come to an understanding of where the common interests lie. It is too easy to fall into the shortsighted trap of a preconceived notion about collective arrangements and try at any cost to avoid entering into such an arrangement.

Advantages of good faith collective bargaining

The finalising of collective settlements can help in building the fair and productive employment relationships that must underpin a successful business and support a growing economy.

Although there may be some conflict during the bargaining process, the end result of a concluded agreement comes from dialogue and consensus. Such an approach has benefits away from the bargaining table, when those good faith behaviours learnt through bargaining extend into everyday working life. Any future problems can be dealt with in a more effective and conciliatory manner - the focus shifts from arguing with each other to finding a solution to the problem.

Further, collective bargaining promotes participation in decision-making - including financial decision-making - by both union, workers and employer parties. Workers have a unique perspective and can help contribute to important decisions. This contribution can have the effect of a more balanced approach to the management of a firm and the firm's future direction.

Bargaining outcomes

Good faith, as promoted by the Act, is manifest in bargaining outcomes.

The duty to act in good faith is often expressed in collective agreement clauses dealing with consultation, exploring redundancy options, and employment relationship problems. This is perhaps not surprising given the courts have paid particular attention to the need for good faith in these areas of the employment relationship.

.Forty-eight per cent of collective agreements provide for consultation to take place between the parties in the event of a redundancy situation. This could entail the exploration of options such as retraining, redeployment, or severance, and the level of compensation payable to a redundant worker.

Also in the case of redundancy, 36 per cent of agreements contain counseling provisions for workers in the event they are made redundant, and 52 per cent of agreements provide either paid or unpaid leave for workers to attend job interviews if they are to be made redundant in the future.

Consultation provisions of a general nature occur in 20 per cent of agreements. This type of provision typically involves a commitment of the parties to consult with each other over any changes that might arise in the running of the business, such as shift structuring, the employment of casual labour, or the introduction of new technology.

Additionally, 50 per cent of collective agreements contain specific provisions for training workers. Such provisions typically include leave with or without pay to attend courses or sit exams, and some employers may also pay for training courses or reimburse workers on the completion of their study.

These are all positive aspects of collective agreements as they go a long way in supporting the objectives and spirit of the employment relations framework.

Good faith dialogue and good faith behaviour, therefore, is not restricted to the bargaining table, but permeates and is infused through all aspects of the employment relationship, at all times, with benefits for all.

Collaborative partnership

The benefits of a collaborative approach can be quite pronounced. Workers are any business's greatest asset in terms of the knowledge, skills, motivation and energy they provide.

Growth and innovation in an enterprise is founded on a strategic direction and an idea of where the enterprise wants to go. In order for a firm to successfully head in the intended direction, it needs the full commitment and energies of those who will actually give life to the vision - the workers. To maximise benefits, all decisions cannot be made unilaterally by the employer.

Studies have found that successful firms are concerned with their workers' welfare and develop comprehensive systems to measure and reward staff performance, provide training and development opportunities, and assess worker satisfaction.

Other studies suggest that innovation and productivity increases are achieved through the continuous, dynamic relationships of employers and workers rather than through one-off or piecemeal gestures. In particular, we know a combination of employment security, flexible job assignments, company supported skills training, communication procedures, teamwork and team meetings promote innovation and improved productivity.

Finally, companies that clearly communicate their values and goals to workers are more successful, and trust between management and workers is an important motivation in worker participation in innovation.

An employer who the best people choose to work for generally views staff as a significant asset to the business and is willing to make an investment to that asset; treats staff with consideration and respect resolves problems as informally and promptly as possible; respects the rights of unions to organise and develops constructive union relationships; and recognises that compliance alone is not sufficient to ensure a good employment relationship.

To this extent, the Act is about the worker being valued by the employer in all stages of the employment relationship, and employers recognising that it is in their commercial interest to value workers.

Other aspects of framework

I have talked about good faith collaborative relationships, but we also need to look at the remaining aspects of the framework.


In terms of other areas where protections are needed, to have an innovative and growing economy, workers cannot go to work with a fear they might be injured - a workplace injury is costly for both the worker and employer.

Recently, the Health and Safety in Employment amendments came into force. They place a duty on employers to provide workers with reasonable opportunities to participate in the processes for improving health and safety at work.

In meeting this duty, and arriving at an effective system, the employer has an overriding duty to act in good faith. Where there are more than 30 employees, or at an employee request, there is a further duty on the employer, workers and union to co-operate in good faith to "develop, agree, implement and maintain" a system of worker participation. Again, the focus is on good faith participation in all aspects of the employment relationship.

The passage of the Act was critical because it demonstrates the Government's ongoing commitment to productive workplace relationships and reflects international standards in the protection of workers.

.Along with the improvements the Act introduces in terms of coverage issues, worker involvement and more effective enforcement, what we are really seeking is a change of culture in our workplaces; one that recognises workers as assets worthy of investment and the benefits of good employment relationships and healthy and safe workplaces. Those benefits include more productive, innovative and committed staff.

Holidays Bill

Another area of legislative change, as you know, is the Holidays Bill which is currently before select committee. This Bill was drafted in consultation with the New Zealand Council of Trade Unions and Business New Zealand, following on from the reports of the advisory group.

By simplifying the law we hope to reduce uncertainty that arose from the old legislation. The new holidays legislation will create a regime that is much easier to understand and apply, and more responsive to the needs of employers and workers.

Also before select committee is the private member's bill for four weeks annual leave. The Government supported the bill going to the committee for consideration and debate.

A point often made by business is that it is all very good to talk of growth and innovation, but if we are tied up with regulatory compliance, we cannot take advantage of opportunities.

Here, I would simply observe that the key issue is balance. Employers are not islands who have no social responsibility. They operate in and draw resources from a wider social infrastructure. For instance, an education system provides businesses with a skilled workforce.

However, businesses need to accept that as they draw from this wider social organisation, there will be corresponding standards, constraints and responsibilities.

In this context, it is also important to acknowledge that workers have responsibilities to contribute to the success of the firm. These responsibilities revolve around the common interests of workers and employers, with workers putting in their efforts to be productive for the firm, the firm succeeding, and the workers and employer benefiting from that success.

It is certainly not the intention of government to bog down enterprises with compliance so they cannot function. That would not be in anyone's interest.

Work-Life Balance

Finally, it is important to remember that work is but one dimension of living and should not crowd out and distort family life, recreation and personal development. Well-balanced and rounded workers are likely to be more productive than stressed and pressured ones. It is our goal to develop an integrated and balanced family-friendly work/life programme.

One of our major initiatives this year will be the establishment of an inquiry into work/life balance issues. I am confident this inquiry will help to shape the Government's response to the complex policy issues in this area.

Workplaces that promote a healthy balance between work and life create benefits for themselves as well. Studies have shown that benefits include an improved ability to recruit and retain good workers, improved staff motivation, and diminished absenteeism.

Not all employers and workers may be interested in developing work-life programmes, but the business case is that in doing so, employers may be able to get a fuller contribution from their workforce. Conclusion

The Government is committed to a balanced approach to employment relations, which aims to find opportunities for business.

Our aim is to provide a solid foundation for a New Zealand economy, where growth can occur and innovation can thrive but not at the cost of minimum standards or the quality of working lives. The focus of the employment relations framework in all this is to provide the foundation for good faith collaboration between employers, workers and unions, so all can reap the social and economic benefits.

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