Unions vs businesses: Fair pay agreement news staunchly divides factions

Workplace Relations Minister Michael Wood announced Cabinet's decisions on fair pay agreements, saying legislation could be passed next year. Photo / File

Unions and business groups are vehemently at odds over the Government's major overhaul of New Zealand's employment laws, specifically around fair pay agreements.

Business groups, such as BusinessNZ and the EMA, say fair pay agreements – as proposed by the Government – should be scrapped and have no place in the modern workplace.

But the Council of Trade Unions (CTU) and the Public Service Association (PSA) are backing the moves, saying it means low-paid workers can look forward to improved working lives.

The issue, perhaps not unexpectedly, has also been a political hot potato.

National said it shows Labour is still stuck in the 1970s and Act said the moves were undemocratic and would be a "wrecking ball" to the economy.

But Workplace Relations Minister Michael Wood said fair pay agreements would improve wages and conditions for employees, and encourage businesses to invest in training.

This afternoon he announced the moves, which aim to standardise and improve terms and conditions across entire industries or occupations.

It represents a step towards collective bargaining, which was largely swept aside with the passing of the Employment Contracts Act in 1991.

The announcement would put a floor on wages by allowing unions to negotiate at a wider, industry-wide, level.

If 10 per cent of a workforce, or 1000 workers, agree to it then a new fair pay agreement could be enacted.

The scheme will come into force next year.

But BusinessNZ chief executive Kirk Hope said employers were not interested in compulsory nationwide pay agreements, irrespective of funding offered.

"They would take away business' right to a say over wage-setting and would lead to labour disputes and strikes."

He added they are contrary to international law, which says collective agreements should always be negotiated voluntarily.

"Business cannot support the plan to implement them."

The Canterbury Chamber of Commerce said fair pay agreements had no place in New Zealand's modern workplace.

"Fair pay agreements would force payment of higher wages within sectors which could force some newer, smaller firms out of business, reducing competition, productivity and growth," chamber chief executive Leeann Watson said.

"It would also destroy contracting, as it would cover all contractors in a sector."

National is similarly sceptical: "Labour's so-called fair pay agreements may be celebrated by unions who are struggling for survival, but they will not improve things for individual workers."

The party's workplace relations spokesman Scott Simpson said the new rules would see 90 per cent of a workforce at the mercy of the other 10 per cent.

Entire industries would be bound by agreements whether they participate in the FPA bargaining process or not, Simpson said.

CTU President Richard Wagstaff said the newly minted agreement would improve the lives of many New Zealanders and their families by lifting the wages of some of our lowest paid.

"The introduction of fair pay agreements signals the biggest change to workplace laws in several decades.

"This is what working people in union have been campaigning for; a more balanced employment relationship between working people and employers - putting people back at the centre of employment."