Business Update - Sickies Problem Monitored

Business Update - Sickies Problem Monitored

SICKIES PROBLEM MONITORED The Holidays Act is causing problems in many workplaces, including:

* A transport company reporting a doubling of monthly sick leave since the Act came into force.

* Another company reporting a tripling of sick leave since the Act came into force.

* A manufacturer whose staff are calling in sick on public holidays that they are scheduled to work to get the same penal rates as if they had worked.

* A district health board reporting a spike in sick leave on weekends for which penal rates apply.
A large part of the problem is the Act's definition of 'relevant daily pay' which requires employees on sick leave to be paid what they 'would have received if they had worked on the day concerned' (see below). The CTU has finally admitted that there are problems with the Act. Please send other examples of Holidays Act difficulties to bburton@businessnz.org.nz .

'RELEVANT DAILY PAY' THE CULPRIT An Auckland manufacturing company provides a good example of the extreme effects of 'relevant daily pay'. Before the Holidays Act came into force, the staff hardly ever called in sick on public holidays or weekends - now, sick leave on those days has gone through the roof. Another problem involves the company's '4 days on 4 days off' deal (4 x 12 hour shifts) in its collective agreement. The first 40 of the 48 hours are paid at ordinary rate and the last 8 hours at higher rates. Since the introduction of 'relevant daily pay', sick leave in the last (highest paid) shift of the 48 hours has spiked, causing several instances where production lines were close to being shut down for lack of staff. The company's stuck with the situation for the time being - the collective agreement is not due for renegotiation for 18 months. The company estimates the extra cost from 'relevant daily pay' could be up to $1 million. Last week the company made anumber of staff redundant, the first redundancies at the company in years, in large part because of the effects of ‘relevant daily pay’ and other sections of the Holidays Act which have had to be applied on top of an already generous collective agreement.

TWO-TIER WORKFORCE COMING The Employment Relations Law Reform Bill is causing problems before it's even passed. Companies that went to the trouble of making select committee submissions say the Labour MPs on the committee basically refused to discuss the costs and inflexibility the law will impose on business: "It was like talking to a brick wall." Companies are concerned that the law will prevent them from paying the same wages to non-union as union staff - the Bill says that's 'undermining collective bargaining', a fineable offence. The result will be a two-tier workforce where non-union members can't be paid as much as union members, and where payroll hassles grow, especially for large companies. Paying the same wages to non-union as union staff ('passing on the terms and conditions of collective agreements') is important to the union movement, which has campaigned strongly against it, calling it 'free-riding' - this provision is therefore unlikely
to be changed by the Labour- and Green-dominated select committee.

POWER SUPPLY AT MERCY OF SPIRITUAL BELIEFS Genesis Power is to appeal the Environment Court's decision to shorten the period of resource consents - from 35 to 10 years - for the Tongariro power scheme. The decision was based on Maori concerns that the scheme denigrates their cultural and spiritual beliefs. Genesis says a 10-year time horizon is not enough to plan for sustainable operation, and long-term commercial certainty over the operation of assets is needed to meet NZ's energy needs. The situation highlights the danger of the Resource Management Act covering spiritual, religious and cultural issues. Contact pwhitehouse@businessnz.org.nz .

RED TAPE TOP ISSUE FOR KIWI BUSINESS Compliance costs topped the list of NZ business gripes in the latest Grant Thornton survey. NZ was the only country in the 26-nation survey where compliance problems were so prominent. Grant Thornton chairman Peter Sherwin says more action is needed on red tape which still rankles business owners despite government promises to reduce it. Survey findings are on www.grantthorntonibos.com

TINKERING WITH TAX Another tax bill is currently before select committee. The Taxation (Annual Rates, Venture Capital & Misc Provisions) Bill tinkers with a number of tax-related issues including annual rates and venture capital. On annual rates, the Bill confirms the current income tax rates will apply next year (i.e. still too high - maintaining tax rates at existing levels is catching more people in 'high income' tax brackets, and is damaging international competitiveness and making NZ less attractive as an investment destination). On venture capital, the Bill will help unlisted NZ companies get access to offshore venture capital by aligning NZ tax treatment with that of the foreign investor's home jurisdiction. A good idea, but how about aligning NZ tax rates with those of other more competitive countries? There's actual and potential LOCAL investment drifting offshore simply because NZ tax rates are too high. Contact nclark@businessnz.org.nz .

HIGHER PAID PARENTAL LEAVE Parental leave payments get bigger from next month. The IRD payments increase from $334 to a maximum of $346 per week from 1 July. Employees wanting to receive the payments must apply using the forms provided for that purpose. The forms can be downloaded from the Labour Dept website: GROWTH STATS

STRONG EXPORT GROWTH IN APRIL QUARTER

* Total exports increased by 7.7% in April compared with April 2003, lifting export growth in the three months ended April to 5.4%, the strongest quarterly growth since Sept 2001.

* The value of the dollar fell 2.4% between March and April (using Reserve Bank weights) but was still 6.9% higher than in April 2003. Over the last 12 months we have appreciated by 16.5% against the US$, 4.5% against the yen but depreciated by 4.8% against the Aus$.

* Manufactured (basic manufacturing sector) exports grew 16% in the year to April 2004, with strong growth in both manufactured commodity and ETM (elaborately transformed manufactures) exports. Manufactured commodity exports increased by 30% in April, with strong growth in sawn timber, wood products and paper and aluminium exports also.

* Exports to Japan, Australia, Korea and China all increased strongly in the month.

* ETM exports increased by 11% in April and by 7% in the three months ended April, growth coming in wine, soft drinks, confectionery, tyres, metal containers, household appliances, electronic equipment and printing exports.

* Overall manufactured (BMS) exports to the US continue to decline, falling by 4.9% in April. Major falls were recorded in iron, steel and transport equipment but industrial machinery, electronic and electrical equipment, household appliances, metal products and sawn timber and wood products were up on April 2003.

* Manufactured (BMS) imports rose by 10% in April. Industrial machinery imports increased by 24% in April and by 15% in the three months ended April. Imports of consumer goods increased, in part due to stronger imports of telephones and related equipment, up 61% in the month.

GROWTH IN HOTELS, COMMERCIAL BUILDINGS

* Statistics NZ reports a seasonally adjusted 13% increase in building work completed between the Dec 2003 and March 2004 quarters.

* $302m worth of hotel and boarding house construction was completed in the year to March, up 25% on the previous year.

* There was $452m worth of factories and industrial buildings and $549m worth of education buildings completed, both 17% up on the previous year.

* The largest component of the non-residential category was for commercial buildings (shops, restaurants, offices, administrative buildings, storage buildings). Total building work put in place in the year ended March was worth $931m, 9% up on the previous year.

* The total value of residential work in the March quarter was $1,687m, up 30% from the March 2003 quarter. On an annual basis, the value of new residential dwellings completed in the year to March was $5,604m, a 29% increase on the previous year.

* The total value of all building work put in place in the March 2004 quarter was $2,504m, up 24% compared with the March 2004 quarter, although after adjusting for inflation the real increase in activity was 14%.

WHAT'S NEW on www.businessnz.org.nz

* Manufacturing expansion weakens slightly in May

* ANZ-Business NZ PMI for May 2004

* In Business June 2004

* Holidays Act requires remedial work

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