Employment Relations Amendment Bill

This week, Free Press examines some of the key elements of the Government’s labour law changes. The Employment Relations Amendment Bill will increase the compliance costs of doing business, tie firms up in red tape, and ultimately reducing the growth in productivity, wages and jobs. It’s a step backwards. ACT supports flexible labour markets.

Why Change?

Politics. All political parties have lost members over the past couple of generations, but Labour has been the worst affected. Helen Clark was paranoid about Rogernomics coming back, so she purged anyone vaguely sensible from the party. Today’s Labour really does represent unionised labour, because nobody else is left. This is why, for example, the Government’s first education legislation was changing the name of the Education Council back to the teachers council, and its second was abolishing charter schools.

Against History

Union density is not an insult but the technical term for what percentage of workers join a union. Like party membership, it has been in freefall for decades, and is below 10 per cent in the private sector mainly because artificially raising wages just sends companies broke. It is over 30 per cent in the public sector because, thanks to the hapless taxpayer, the public sector can’t go broke.

Against Economics

In the 60s, when there were about a dozen different jobs in the New Zealand economy, national awards were silly but feasible. Today there are so many different occupations it is infeasible to have national pay rates. What should a social media influencer be paid? How does that compare to a software project manager or a business coach? Economics tells us that wages need to be set freely in a complex economy so people know where to develop and apply their skills.

90-Day Trials

90-day trial periods are gone for firms with more than 20 employees, i.e. those that employ more than 70 per cent of workers. Firms overwhelmingly support trial periods. An EMA survey found 80 per cent have used them. They reduce the cost and risk of employing workers and give employers more confidence to hire young, unskilled people. They also save both the employer and the worker hassle in the long term – no-one prefers to be an employee who is unvalued but kept on a roster because their employer has no choice. Research shows the policy has not led to exploitative hiring and firing – companies don’t throw away money by firing staff at will. This change will hurt young and unskilled workers.

Union Access to Workplaces

The Employment Relations Amendment Bill removes the requirement for union representatives to seek permission to access workplaces and talk to workers. This purpose of this change is to help unions recruit new members. It will hamper the ability of employers to manage the issues and disruption that non-employees might cause in their workplace. Businesses need know who is on site at all times. No other visitors, except perhaps labour inspectors and Police, have this level of access to workplaces.

Rest and Meal Breaks

The Bill rigidly prescribes minimum rest and meal breaks. Unless agreed otherwise, employees who start at the same time get meal breaks at the same time, making it difficult for firms that run 24/7 operations and those that require continuous cover. This provision can only hurt productivity. There’s considerable variation in starting and finishing times for firms that are weather-dependent. It will be impossible for these firms to comply with the Bill in the event there’s no agreement as to when breaks should be taken, putting employers in the position of breaking the law.

Duty to Conclude Bargaining

The Government’s Bill also includes the duty to conclude a collective agreement in bargaining unless there is good reason not to. This effectively makes settlement of a collective agreement mandatory, potentially contravening the right to freedom of association. The requirement to settle a collective agreement will become a tool to resist change. Business restructuring will be held up while bargaining continues. Unions will threaten to file for mediation and the Employment Court. How can businesses effectively operate in these circumstances?

Fair Pay Agreements

The Government dreams of bringing back National Awards, where a wage is set for an entire industry. The worst workers in the industry will no longer be encouraged to succeed in other areas, but retained at a far more generous rate than any sane employer would pay them. The best workers will grow resentful. Teaching is the industry that has been most persistent in having this policy and principals now face critical shortages of people who want to join the profession.

I Guess That’s Just Politics

Welcome to politics. Against history and economics, and every trend in the modern world, we have a Labour-led Government taking New Zealand backwards as a product of their internal politics.

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