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Mapp Speech: Productivity and the Workplace

DR WAYNE MAPP National Party Industrial Relations Spokesman MP North Shore

Productivity and the Workplace - National’s Policy

The key issue facing the country is how to close the income gap with Australia. That means more growth and higher productivity. The after tax income gap between the two countries has grown from $5,000 in 1999 to $9,000 today. The reason for the increased disparity is that New Zealand has lower productivity growth at around 1.5% per annum. The comparable figure in Australia is 2.5%.

The growth of the last few years has gone into growing the labour force, not making the existing workplace more productive. The outcome might be lower unemployment, but it has also meant lower growth in incomes than Australia.

National has a plan to boost productivity. It rests on three pillars:

Lower taxes. Greater skills training. Lower regulatory and compliance costs.

National’s policy in employment is all about reducing compliance costs; to produce a better and more productive business environment. Everyone wins; from employers, to employees, to consumers.

This means rolling back Labour’s re-regulation of the workplace, which is now the cause of so much union militancy. If you give power to the unions they will use it.

The actions of the EPMU show how far unions have to go before they understand the modern economy. The EPMU want multi-employer collective contracts. They want a single approach to wage increases. They simply do not understand that each firm faces different conditions in markets and in employment relationships. That is why employers have been so strongly resisting the ill thought out campaign of the EPMU.

Over the last month there has been a strike or stopwork virtually every day. Today’s Stagecoach bus strike shows the absurdity of this union militancy. The strikers are going for $16.00 per hour. They have already been offered $15 per hour, plus a $600 lump sum payment. This is a 10% wage increase. Effectively they are striking for 66 cents per hour – the difference between $16.00 and $15.34. Even the Employment Authority says they should accept the deal offered by Stagecoach. No wonder many drivers are now seeking individual agreements.

There is a long list of companies hit by strikes and stopworks in the last month: Twenty manufacturing companies employing EPMU members in Auckland and Christchurch Stagecoach in Auckland and Wellington Middlemore Hospital The University of Auckland The Morgan furniture company in Glenfield Petone’s Colgate-Palmolive plant Christchurch City Council Shearers union will seek a multi-employer collective agreement EMPLOYMENT RELATIONS ACT

National’s fundamental approach is to provide workplace flexibility, to allow an even handed approach to workplace negotiation. This will require the repeal of last year’s amendments to the Employment Relations Act. It will also require substantial re-writing of the Employment Relations Act as it was passed in 2000.

The amendments of 2004 have particularly strengthened union monopoly power. It is clear that boosting union power was the main purpose of the amendments. These powers have formed the basis of the current action by the unions:

Employers are forced to negotiate with unions Employers cannot object to negotiation, simply because they do not agree with collective bargaining The Employment Authority can impose the employment conditions upon the parties Compulsory bargaining fees can be levied against non-union members if a majority of workers agree, and can only be avoided if the employee says “no” in writing.

Unions are using these powers to demand more collective agreements, particularly multi-employer collectives. The whole EPMU campaign comes from their collective mentality – the view that one size fits all.

National is absolutely clear on this; we will repeal each and every provision of the 2004 amendments.

In addition to the repeal of the 2004 amendments, there will also be substantial changes to the Employment Relations Act 2000. We recognise that we cannot simply return to the Employment Contracts Act 1991. We will take the best features of the 1991 and 2000 Acts, and restore balance to New Zealand’s employment law. The result will be new legislation, the Employment Agreements Act. Specifically, the changes are as follows:

Removal of the union monopoly on negotiating collective agreements (Part V of the ERA). Removal of the automatic right of union access to workplaces. Access must be by agreement with the employer except where employees have nominated a union or a bargaining agent to negotiate collectively on their behalf. If unions want meetings, they should be held outside work time. New employees should choose whether to be covered by a relevant collective agreement when their employment begins, there should be no 30 day choice period for people to choose an individual contract or collective contract. Removal of the collective agreement preference provision. Collective agreements should not provide a special reward for employees who bargain collectively. Employers should only have to deduct union fees by agreement, not compulsion. Compulsory trade union education leave will be abolished.

We will add new flexibility to help employers and employees take a chance with one another. There will be the option of a 90 day probation period for new employees. If the relationship does not work out during this period, either party can walk away without personal grievance procedures applying. Ninety day probation periods are the norm in the OECD. In Britain it is 12 months. Only New Zealand and Denmark do not have probation periods. It is time for New Zealand to come into the mainstream.

Dispute resolution is an inherent feature of employment agreements. Access to justice has to be readily available in order to reduce costs and increase effectiveness. The Labour Government closed the Employment Court Registry in Christchurch. People in the South Island now frequently have to travel to Wellington to have their cases heard unless the Court is on circuit. The Employment Authority has its sole South Island base in Christchurch. The process of mediation, with reference to the Employment Authority and the Employment Court, has been accepted, but it has to be readily available to be effective.

There are some concerns about the quality of some mediators and Authority members. We will review all appointments and ensure they are made on the basis of merit, not political correctness. This is particularly important for the Employment Authority which has extensive legal powers. Their decisions should be predictable and certain, and based on the law.

At the other end of the legal process is the appellate system. The Labour Government seems to have forgotten they recently established the Supreme Court as a leave court. So we have the irony that an appeal from the Employment Court to the Court of Appeal requires leave, and so would further appeal to the Supreme Court. We say there should be a single rule for all litigation – appeal by right to the Court of Appeal and appeals by leave to the Supreme Court.

It is National’s goal to provide legislation which will give long term stability in employment law, allowing freedom to employers and employees alike to negotiate the agreements that suit them best.


The Holidays Act 2003 has proven to have serious deficiencies, especially around payment for public holidays, and sick and bereavement leave. The legislation has added huge costs in these areas and has harmed productivity. The Air New Zealand 2004 annual report showed a $17 million increase in the wage bill simply due to sick leave and statutory holidays. There was no corresponding increase in productivity. The meat industry has had a 75% increase in sick leave. Many restaurants, bars and cafes cannot afford to open on statutory holidays.

There were changes last year to deal with “unintended consequences”. The real problem is that the Holidays Act legislation has far too many intended consequences which have harmed productivity, and the amendments last year did not deal with these problems. National proposes the following changes:

Remove the provision for “relevant daily pay” to revert to “ordinary pay”. This will mean that payment for public holidays, sick days and bereavement leave does not include overtime and productivity bonuses. It will be administratively a lot easier for employers to calculate pay. Reviewing the payment formula for statutory holidays. The current law is particularly harsh on service industries who extensively employ casual and part time staff, and those who operate 24/7 businesses such as Air New Zealand. Allow the fourth week annual leave to be taken as salary/wages rather than annual leave, by mutual agreement.


Labour amended the 1992 legislation to make work related stress a specific ground for OSH action. It has become an easy option in employment disputes for an employee to claim work related stress as the reason for non-performance. It is easy to assert and difficult to disprove.

Labour also added compulsory employee representation in workplaces of 30 or more employees. These positions are often taken by union officials and are used as another bludgeon to intimidate employers. The compliance required is focussed on bureaucratic compliance, rather than producing safer workplaces.

National will:

Allow for the voluntary development of workplace safety systems in full satisfaction with OSH rules. Remove workplace stress as a specific ground for OSH action. Review the legislation generally to reduce the complexity of OSH workplace requirements, consistent with safety.


National aims to have more productive workplaces. OECD research shows that flexible modern employment law is crucial in achieving productivity gains. National’s policy will deliver employment law that meets the needs of the modern economy. This will boost New Zealand incomes, both of businesses and employees.

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