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Mallard: The new era of employment relations

3 September 2008

The new era of employment relations

Labour Minister Trevor Mallard's speech to Business NZ forum. Wellington

Thank you for the opportunity to be here today.

Labour believes very firmly in the importance of constructive partnerships between employers and employees to drive higher wages and lift productivity.
We believe that higher wages are not only good for the welfare and living
standards of workers and their families around New Zealand – but they are
also a key factor in incentivising employers and businesses to upskill and
train their staff, and to invest in capital equipment to support a more
skilled workforce.

Over the last eight years our work in this area has been framed around a tripartite approach involving government, Business NZ and the Council of Trade Unions - as a way of lifting productivity, lifting wages and driving economic growth.

The Employment Relations Act re-established the legitimacy of collectives and collective bargaining. And by collectives I mean unions – which are legitimate and independent groups of workers.

I do not mean employer-organised collectives of workers that were promulgated in the bad old days – which National wants to return to.
Historically low levels of unemployment have also provided an excellent opportunity to build on the changes embodied in the Act.

Under tripartitism we have worked well together over a number of important initiatives, including the Workplace Productivity Agenda and the work-life balance initiative.

It goes without saying that we are firmly committed to continuing this innovative and groundbreaking relationship.

It also goes without saying that National's approach to employment relations will totally destroy this work and turn back the clock. Their proposed "fire at will" policy will create fear and mistrust and do nothing for collaboration.

This sort of tired old approach is also unnecessary given there are already probationary periods allowed under the Act – but with the standard protections to ensure vulnerable workers are not bullied, ripped off or sexually harassed.
Likewise concerns about the relevant daily rate are misplaced in a collaborative workplace environment. To work the rate out takes a little time, but results in a fair outcome to both parties. Many of the complaints that employers have about the costs are because they haven't sat down and actually thought about the employee and what they would usually get paid, but rather left it to the computer formula to decide.

The social partners have also developed case studies of New Zealand businesses that have made changes to their workplace practices, which highlight the gains for both employers and employees from improved productivity.

A key priority over the next year is the implementation of five projects involving business and employee organisations. The projects are trialling different approaches to implementing productivity-related changes in different workplaces, industries and regions. Specifically they involve niche manufacturing firms, horticulture and viticulture labour contractors, a supply chain in an urban-rural region, printing and packaging firms and a project centring on building workers participation within a high performing workplaces framework. The businesses involved in these will use their networks to spread and build on the lessons learned.

Linked to this is the role that managers play in workplace productivity and our economic performance.

There is evidence that New Zealand looks weak, such as perceptions of management capability from the IMD World Competitiveness Survey. And there are some reasons to think there might be particular challenges for New Zealand: our small domestic market means businesses looking to internationalise will likely be doing so from an earlier stage in their life cycle than they would be in, say, Australia.

The importance of management is ultimately about a business’s processes, practices and structures.

The government’s approach could probably be characterised as working on a couple of different fronts.

First, the business environment still matters. Reducing the corporate tax rate, introducing research and development tax credits, and so on, all actually help support development of better management practices.

Second, I see a role for government in making sure that when a firm wants to look at changes to management practices, it can. That’s why we’ve made sure programmes are available through New Zealand Trade and Enterprise to access training and expertise. That’s why the Workplace Productivity Agenda is in place to share best practice.

And that’s why management capability is a priority area in the government’s Skills Strategy going forward, so tertiary training is available to help New Zealand managers.

Good employers, scheme providers, and workers have made KiwiSaver the success it is and should be applauded for recognising its huge benefits.

They realise that the scheme presents an opportunity to provide security in retirement and to build a large pool of domestic capital to drive New Zealand's economic growth.

As you know, employers are being fully compensated via a tax credit for their contribution to KiwiSaver in the first year (up to salaries of $104,000) – but we have had some situations where employers have said they intend to deduct the employer contribution from their staff's pay packets – despite receiving the tax credit.

Most fair minded people would regard that as unethical and the Employment Relations Act is being amended to make it absolutely clear that this can no longer happen.

ACC will remain in state hands – it delivers for workers and it delivers for business. Safe workplaces are productive workplaces and any good employer realises that.

ACC outperforms private schemes – it offers New Zealanders broader coverage, a faster return to work, high levels of compensation, lower costs, and fewer disputes.

Australia's serious injury and disease claim rates for workers' compensation is 9.4 claims per million hours worked in Australia, compared with 7.4 here in New Zealand. And 39 per cent of injured workers in Australia receive compensation for six weeks or longer, compared to just 31 per cent in New Zealand

An independent study by PriceWaterHouseCoopers also found that ACC should be considered ‘best practice’ when compared with international schemes. And it found that employer levies in Australia are about 2.5 times (or 250 per cent) higher than they are here. So why would employers want a privatised scheme?

You all know that we are committed to continual increases in the minimum wage, and to further extensions in paid parental leave.

Labour believes these policies are important for workers and also have very positive spinoffs for employers – in terms of attracting and retaining staff and incentivising productivity, especially in these times of skill shortages. Pay is not the only thing that commands the attention of good staff.

Finally, let me emphasise that New Zealand is the second easiest place to do business in the world. As one business lawyer recently pointed out in NZ Business, in a column on compliance costs and workplace regulations: "the employment law environment in New Zealand is among the most benign in the commercial world."


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