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NZ needs pay reforms to avoid 'yellow vests' populism - Bolger

NZ needs pay reforms to avoid 'yellow vests' populism, says former Nat PM Bolger

National wage bargaining arrangements that help deal with both high income inequality and low productivity are key to New Zealand avoiding the rise of populist politics seen in other parts of the world, says the chair of the Fair Pay Agreements Working Group Jim Bolger.

"New Zealand must make certain that we don't get into that space, that we don't have the yellow shirts that we see in Paris," said the former National Party Prime Minister, referring to the right-wing nationalist 'yellow vest' protests that have seen violence and property damage in the streets of the French capital in protest at the policies of President Emmanuel Macron.

Bolger said the report, which recommends unpicking key elements of the labour market deregulation enacted by his own government in the early 1990s, was "not a big step at all", but a "small step in the right direction" of employment relations reform more in line with many other members of the rich countries club, the OECD, and tailored to New Zealand.

The working group examined the "more dictatorial" national collective bargaining system in Australia and "we didn't see that model fitting easily with ours", said Bolger.

A slew of supportive statements from trade unions and criticism from employer groups followed this morning's release of the working paper, which the government first saw in November. Lees-Galloway presented today's report as a final version.

A key sticking point is the recommendation that all workers covered by an FPA negotiation would be compulsorily represented by a trade union, irrespective of their existing employment arrangements. National's employment relations spokesman, Scott Simpson, called that "a step towards compulsory unionism" and the Canterbury Chamber of Commerce said there was "a very real concern that this would disproportionately and adversely impact smaller regionalised businesses".

"Considering the significant number of SMEs (small and medium-sized enterprises) in New Zealand, the implications of this would be far-reaching," said chamber chief executive Leeann Watson. "We believe that the decision to enter an employment agreement should always be voluntary, which is much more in keeping with the modern principles of good faith."

Bolger said the provision was important "to prevent people ducking away from their responsibilities".

"Some employers unfortunately will, throughout history," he said. "Compulsion is a reasonable compromise."

Lees-Galloway stressed that best practice advice from the OECD was to have a mixture of sector, enterprise, and individual employment bargaining.

"We've got the enterprise and individual level bargaining. What we don't have in New Zealand is the sector-level bargaining. We're moving to exactly the model that the OECD in the 21st Century is recommending we should have."

However, he gave no firm timetable for Cabinet decisions and declined to say whether he expects legislation to enact FPAs will reach Parliament this year, saying that was one of the reasons Prime Minister Jacinda Ardern had said there would be no more than one or two FPAs in the current parliamentary term.

There would simply too little time to do more, he said.

In response, Bolger urged Lees-Galloway not to let the report "sit on a shelf" and Council of Trade Unions chairman Richard Wagstaff said the government needs to "move swiftly to turn these recommendations into law so that Kiwis can have fairer work, the work we all deserve".

"While nearly 40 percent of children in poverty have parents that work, FPAs represent the largest step toward reducing child poverty that this government has taken so far," Wagstaff said.

Two emerging areas of likely policy arm-wrestling are the proposal to allow FPAs to be triggered if just 10 percent or 1,000 members of a workforce, whichever is smaller, call for it, and limited opt-out provisions.

"It's a low-level trigger," said Bolger of the 10 percent threshold. "Where the Minister and his colleagues end up on it, I don't know. The majority of the panel believed it would be beneficial to enable the process to start. This is one of the key issues."

Employer peak body Business NZ said FPAs would "bring risks to business and the economy" and said the reforms should back voluntary rather than compulsory union representation.

Bolger said the worry with leaving representation voluntary was that "those we want in, won't come in".

The FPA reforms were aimed primarily at "the working poor", he said, noting tables in the report that show the sectors with the largest workforces earning a median hourly rate of under $20. By far the largest is 107,000 sales assistants and salespeople on a median $18 an hour, as are some 44,900 cleaners and laundry workers. The next largest identified group was farm and forestry workers, on a median $18.70 an hour.

The lowest-paid group was food preparation assistants, with 21,900 workers, on a median $16.50 an hour, following by checkout operators (15,600) and hospitality workers (39,200) on a median $17 an hour.

Business NZ chief executive Kirk Hope said business owners "would want to see significant changes to the proposals to address the likely risks to business, jobs and growth".


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