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"Fair Pay" Agreements Take Us Back To The 1970s

“Labour’s so-called ‘Fair Pay’ Agreements will take industrial relations back to the 1970s”, says ACT’s Workplace Relations and Safety spokesperson Chris Baillie.

New Workplace Relations and Safety Minister Michael Wood said this morning that Labour will press ahead will FPAs.

“Labour claims FPAs will help poor productivity and wage growth in industries in which employers have strong bargaining power, but neither Treasury, nor MBIE, nor the Fair Pay Agreement Working Group could find evidence of this.

“Treasury has said there’s no empirical evidence to support FPAs and couldn’t identify an industry where the policy will fix anything. In fact, centralised bargaining will make it harder for firms to remain competitive.

“The Fair Pay Agreement Working Group led by Jim Bolger argued collective bargaining might raise productivity, but then admitted there’s no real evidence for the claim.

“A report from the New Zealand Initiative showed the labour share of income hasn’t fallen since the Employment Contracts Act. Ironically, the data show that losses occurred before the ECA, when we had labour laws more like what Labour is proposing.

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“ECA allowed firms and workers to negotiate freely. Since 1991, real wages have steadily increased. Even the Council of Trade Unions accepts this. FPAs will return New Zealand to a situation of stagnating wages.

“FPAs run directly counter to the values of success and achievement that are cultivated by linking efforts and reward. The policy will take us back to an era in which wages aren’t linked to effort and initiative. It’s a misguided policy that will destroy incentives, tie people up in red tape and make us all poorer.

“Everyone in an industry, regardless of employer, will get the same collective agreement. FPAs can be initiated by just 10 percent of workers in an industry, meaning employers and employees would be required to abide by the terms of an agreement 90 per cent of them didn’t sign. But the right to associate, or not associate, with other parties is a fundamental freedom.

“A country can’t sustainably increase wages by wishing or by legislating. If Labour is committed to raising workers’ pay, it won’t add another layer of bureaucracy, but maintain the system that has done well for workers over the past three decades.”

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