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The case for scrapping the ECA

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"Labour will repeal the Employment Contracts Act because it is unfair, contravenes important ILO conventions and has failed to increase productivity or growth," Labour finance spokesperson Michael Cullen said today.

"The Act is unfair because it pretends there is no imbalance in the power relationship between workers and employers. The reality in all but the most exceptional cases is different, as most people - and even most economists - are prepared to acknowledge.

"To quote J. K. Galbraith in his autobiography, A Life in Our Times: "That the individual worker, needing regularly to eat, often committed to a mortgage and in doubt as to alternatives, can deal on equal terms with the large corporate buyer of labour can be believed only after much careful training."

"ILO conventions 87 and 98 developed out of the principle to which Galbraith refers. They promote the right of workers to organise and bargain collectively. The ECA is in breach of both of them.

"An ILO report into New Zealand in 1994 recommended that the law be changed to give workers the right to strike in pursuit of a multi-employer contract. The Government rejected this advice. Labour will adopt it and will bring New Zealand into conformity with the ILO.

"National dropped equity as an objective of New Zealand's industrial law with the passage of the ECA, promising only that it would deliver economic efficiency. But even on this narrow test it fails.

"Labour productivity growth has actually fallen since the Act was introduced, according to Reserve Bank figures. The series only goes back to 1987 but still the evidence is compelling: from 1987 to 1990 labour productivity grew at an average annual rate of 2 percent. In the ECA era - 1991 to 1999 - the figure has slipped to just 0.36 percent.

"The Government and its friends in the business community make big claims for the ECA. But they strain credibility when they attempt to credit every job created over the last nine years to the Act. They also conveniently overlook the fact that many of these jobs are part-time, casual, low paid or all three.

"It is time this unfortunate experiment was brought to an end. The incoming Labour Government will do that as a matter of priority and will bring in a fairer regime within our first year in office," Dr Cullen said.

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