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The Employment Relations Act, One Year Old

One year after the Employment Relations Act became law on October 2nd 2001, the Employers & Manufacturers Association (Northern) has issued a further report card on its performance. In a nutshell, the ERA has had a promising start.

"Though it's still too soon to assess the Act's full impact, the Act is working well in some key areas," said EMA's Manager of Advisory Services, Peter Tritt.

"As with any new law there remains some uncertainty on what it will ultimately mean until the Appeal Court has had a final say.

"The indications are that rather than needing a sea-change overhaul, it needs the reworking of some of provisions to make it more equitable between employers and unions, and to give employees who choose not to belong to unions the same rights as those that do.

"Our scoring of the outstanding issues are as follows:

* Strikes: The figures are still very low in historical terms. Work stoppages declined throughout the 1990s thanks to the Employment Contracts Act. However, the latest (March 2001 quarter) statistics show a worrying upward trend. There is concern that the next quarter's figures will go higher.

The March quarter's six strikes and two lockouts (6,209 lost days) were a 13-fold increase over the December quarter 2000, and up 48 per cent on the March 2000 quarter. In fact, calendar year 2000 had the lowest number of recorded stoppages since 1935.

A further worrying trend has been the re-emergence of coverage and demarcation disputes.

Mark: Good, but a sustained effort needed to maintain this result.

Major employer concern: Prohibiting employers from replacing striking workers has made the strike weapon too powerful.

Union membership: Latest figures show union membership is on the rise for the first time in 15 years. At the end of 2000, there were 319,000 union members, up 16,100 (5.3 per cent) on 1999. However at around 21 per cent of the work force, there's still a long way to go to reach the heyday of unionism in the 1940s when 60 per cent of employees were union members. It's too soon to tell whether the ERA will reverse the international de-unionisation trend.

Mark: A pass in terms of what law sought to achieve. Future progress seems limited.

* Unions: A more significant trend is a doubling in the number of unions from 82 before the Act to over 160. Many of the new unions, which account for 17 per cent of union membership growth, are a direct response to the Act's statutory monopoly for unions in collective bargaining. Many are boutique unions, such as those representing rugby and cricket players. There's even a union for union officials - the Union Workers' Union of Aotearoa.

Mark: Very good. Free competition is working.

Major employer concern: The unions' statutory monopoly discriminates against employees in small workplaces.

* Wage settlements: While a few settlements have been over 4 per cent, most collective agreements are settling within 2-3 per cent and wages have risen across the board in the year to June between 0.9 - 2.3 per cent, depending on the sector. The overall movement in wage and salary costs has been only 1.8 per cent. While there has been growth, overall the pattern appears little different than the 1990s.

Mark: Very good.

Major employer concern: Return of inflation-driven wage demands and settlements.

* Good faith bargaining: The Act and its code of good faith are working well enough. There's no reason to believe that good faith bargaining won't become an enduring part of our industrial scene, as it is in North America.

Mark: A promising start.

* Multi-employer collective agreements (MECAs): With the Government committed to returning the public sector to MECAs, growth in their numbers was expected, but MECA's remain rare within the private sector.

Mark: Fail. Needs reworking.

Major employer concern: Compelling employers into pointless bargaining over unwanted MECA's that are irrelevant to enterprise-based bargaining is time wasting nonsense.

* Employment relations education leave: Millions of taxpayer dollars, which could be better spent are being wasted on new ERE training courses. The impact of huge numbers of lost days is now beginning to bite on employers.

Mark: Fail. This new subject should be dropped.

* Union access rights: There's something wrong with a law that allows a union to ask for a fourth meeting after no employees came to the first three and allows union officials to badger youth employees about membership.

Mark: Fail. Needs major revision to succeed.

* New employment institutions: The two new employment institutions have been a major success story. Although the new mediation service had some teething problems, overall they're quick and efficient at solving 80 per cent of the problems that come their way. The new Employment Relations Authority, also quick and effective, is dealing with cases in less than a month. The old Employment Tribunal, which is still dealing with its backlog of cases, took 1-2 years.

Mark: Very good.

Major employer concern: Adequate government funding may not continue.

Employment Relations Service: This Labour Department service has performed well in implementing the new law.

Mark: Very good.

* Employment Court: How can a court get it so wrong so often? Even the Government must be wondering about the wisdom of letting this "unreconstructed" court remain after getting burnt in the cross-examination case.

Mark: Class dunce.

Major employer concern: An unnecessary and costly tier of bureaucracy that should have been abolished.

* Dependent contractors: Disgruntled contractors are now successfully re-litigating the contract basis upon which they had previously been happily engaged.

Mark: Fail. This law should be returned to its previously clear position.

* Compliance requirements: There remains widespread non-compliance among small to medium businesses, many of which seem unaware or uncaring of the Act's $10,000 penalties for non-compliance.

Mark: Fail.

Major employer concern: The new compliance requirements are too hard and too costly for the vast majority of small businesses.

* Probationary employees: New prescriptive requirements and full rights for probationary employees were a move in the wrong direction.

Mark: Fail, needs major revision.

Major employer concern: The absence of a grievance-free probationary period is a major barrier to reducing unemployment among the unskilled."


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