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FPAs Have No Place In Modern Workplace - Canterbury Chamber

Canterbury Employers’ Chamber of Commerce (The Chamber) Chief Executive Leeann Watson says there is no place for Fair Pay Agreements (FPAs) in the modern workplace, following today’s announcement detailing the introduction of FPAs and a plan to implement them.

FPAs are single documents that set the terms of employment and conditions of work for all workers in a specific sector, industry or occupation. The Agreements are nation-wide and compulsory, and are set to be introduced next year, along with financial support for the New Zealand Council of Trade Unions and BusinessNZ to coordinate them.

Ms Watson says the introduction of FPAs is "hugely problematic" for the business community.

"The introduction of FPAs really goes against the country’s progressive employment environment, effectively taking away the rights of employers to set their own wages, which will be hugely significant for the business community.

"We are a country of small businesses. FPAs would force payment of higher wages within sectors which could force some newer, smaller firms out of business, reducing competition, productivity and growth. It would also destroy contracting, as it would cover all contractors in a sector."

Ms Watson says the move does not reflect today’s modern workplace.

"Employee expectations have changed dramatically from when financial remuneration was the only benefit. While small businesses may not be able to compete with big business wages, they can compete in providing an attractive employment package through the ability to engage in meaningful work, flexible work environments and so on."

Ms Watson says even if there are only one or two FPAs in the first year, the potential impact goes well beyond that.

"With the introduction of FPAs, there could be a wage-price spiral, which we have seen in the past, when compulsory collective bargaining led to wage inflation and higher prices, and FPA settlements impacted other sectors, causing wage relativity pressures and increased prices. There is also the possibility of FPA claims spreading rapidly once enabling legislation is passed.

"Standardising conditions across industries and occupations, makes them less flexible, less resilient and ultimately less productive - which is not what our economy needs and especially not now given many businesses are facing the challenges of a Covid-19 environment as well.

"This really goes against everything we are trying to do for employment in this country, which is to create a progressive, enabling, supportive environment where businesses - and therefore their communities - are able to thrive."

Ms Watson says plans to introduce and implement FPAs should be ceased.

"While there has been significant engagement between the business community and the Government, this time the key problems raised have not been addressed, so we do not believe FPAs should be progressed at this time.

"We are calling for the Government not to implement any legislation or regulation with respect to FPAs or if it does implement FPAs that they should be voluntary and not compulsory. We look forward to continuing to engage with Government on this issue, including through the BusinessNZ Network."

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