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Home / Business

Editorial: Problems ahead for business with passing of Fair Pay Agreements Bill

NZ Herald
27 Oct, 2022 04:00 PM3 mins to read

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Government Minister Michael Wood with Trade Union representatives at Parliament to support the Fair Pay Agreements Bill. Photo / Michael Neilson

Government Minister Michael Wood with Trade Union representatives at Parliament to support the Fair Pay Agreements Bill. Photo / Michael Neilson

Opinion

OPINION:

When marking Government Ministers in the Herald's recent Mood of the Boardroom survey, business leaders cited delivery of transformative change as one area where Labour had failed.

Perhaps they should have been more careful about what they wished for.

This week the Government delivered a significant piece of legislative change - but certainly not what business groups wanted.

On Wednesday the Fair Pay Agreements Bill passed its third reading in Parliament with the support of Labour, the Greens and Te Pāti Māori.

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While inevitable it would get over the line, opposition parties fought to the bitter end to slow the Bill's passage. National and Act have said they will repel the legislation if elected next year.

The process to this point can be best described as an ugly affair with business groups opposed to the Bill going hard against the unions, Labour and the Greens.

Both sides were accused of running misinformation campaigns with Business NZ copping the main flak for a misguided handling of an International Labour Organisation report.

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The final debate in Parliament this week spanned 13 hours, punctuated by yet more fiery exchanges between political opponents.

The incoming legislation marks the biggest change in employment law since the 1991 reforms and the Employment Contracts Act that effectively depowered unions.

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The Fair Pay Agreements system is envisioned to bring together employers and unions within a sector or industry to bargain for minimum terms and conditions for all employees.

The system includes support for parties to help them navigate the bargaining process and reach an outcome, as well as processes to ensure compliance.

Crucially, if 10 per cent of a workforce or 1000 workers agree, a new Fair Pay Agreement can be enacted. And if negotiations reach a stalemate or a deal is twice rejected by either workers or employers, then the Employment Relations Authority (ERA) will step in and set the minimum terms and conditions.

This ERA step is just one of the issues business has with the Bill and Business NZ is dismayed its pleas for more consultation to consider alternative suggestions were completely ignored.

Kirk Hope, who advocated hard for businesses, has argued that driving wage rates up to try and drag productivity up is a flawed approach and could well lead to people being forced out of work.

His counterparts at Retail NZ and the Restaurant Association have been equally scathing, describing the legislation as a "recipe for disaster" and a fast road back to the 1970s.

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But the Government is convinced it's the right approach.

Workplace Relations and Safety Minister Michael Wood called it a step towards a fairer system for New Zealand workers, and Finance Minister Grant Robertson said it should be viewed as good news for employers who would no longer be forced to drive their wages and worker conditions down to stay competitive.

It remains to be seen who is right.

One immediate issue is the complexity of the system, which is going to be difficult for all parties to navigate.

What will be needed is an effective education programme because many employers and employees don't know exactly what lies ahead.

For many businesses, it will be a fast learning curve.

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