Top CEOs are concerned that the proposed changes will not be productive for business or the economy.
Employment law changes proposed by the Coalition Government will deliver increased union activity and disrupt long-term economic growth, say many of the country's chief executives.
The CEOs are at odds with the rationale for the Employment Relations Amendment Bill, which is with the Education and Workforce select committee. Up to 76 per cent of the respondents to the Mood of the Boardroom survey were concerned about provisions in the bill.
A near majority of the respondents (49 per cent) said the Government wasn't handling negotiations and strike action by nurses, teachers and government staffers well. Nearly one-third said the Government was handling the negotiations well, while 19 per cent were unsure.
Said a private equity boss: "Most employers are good and need those people. Legal reform is aimed at the 5 per cent of bad ones. Just increase fines and convictions for them."
Roger Partridge, chair of The New Zealand Initiative, explains higher wages come from higher productivity. "None of these changes are productivity enhancing, and will not help workers.
"Yet, they will add cost to business, making businesses less profitable. In the long run, this will harm both consumers and the economy."
Among other views:
● An international food distributor boss adds "in my experience, union activity has been focused on increasing membership (revenue) rather than securing employee welfare or rights. These changes increase the scope for disruption in the workplace and will not deliver any improved benefits to our staff."
● Craig Stobo, Chair of the Local Government Funding Agency, says it's difficult to argue rationally what the measures attempt to fix. "Ministerial descriptions point to political expediency which is understandable under the current Government."
In announcing amendments to the Employment Relations Act 2000, Workplace Relations and Safety Minister Iain Lees-Galloway said the Government was taking an important step toward creating a high-performing economy that delivers good jobs, decent work conditions and fair wages. The amending legislation is designed to provide greater protections to workers, especially vulnerable workers, and strengthen the role of collective bargaining in the workplace to ensure fair wages and conditions, and promote productive employment relationships.
"Making life better for working New Zealanders is a fundamental value for the Labour-led Government," Lees-Galloway said. "Too many working New Zealanders are missing out on the benefits of economic growth under the current employment relations system.
"Many of the changes in the bill are focused on lifting wages through collective bargaining. Wages are too low for many families to afford the basics.
"Good employment law strikes a balance between employers and workers. Under the previous Government the balance tipped away from fair working conditions for workers. We will restore that balance."
The key amendments include: Restoring statutory rest and meal breaks; limiting 90-day trials to employers with fewer than 20 employees; restoring reinstatement as the primary remedy to unfair dismissal; increasing protections for vulnerable workers such as cleaners and caterers when a business is transferred or restructured; and strengthening collective bargaining and union rights in the workplace. Plans to abolish 90-day trials for larger employers were met with strong reaction:
● A Labour-led Government should want businesses to take on more people — but there is risk associated with this. "The 90-day trial reduces the risk and encourages businesses to give someone a go. Why on earth would you want to eliminate this if you have an objective of job growth?" (rural sector boss)
● The 90-day rule is not abused by the vast majority of businesses. "This change makes no sense and is arbitrary." (contracts consultancy)
● "The 90-day trial has given us the confidence to take on staff when we had some doubts as to whether they had all the necessary attributes. Happily they did, and now are part of the team. Without it, we may have been more risk averse and not hired them." (legal firm boss)
● Devon Investment Funds' Paul Glass: "What an ideologically driven mess — 90 day trials work very well and encourage businesses to take a risk with workers."
On the collective bargaining provision, Business NZ chief executive Kirk Hope cites the example of a cafe owner who hires several baristas. The owner's view of how much she can afford to pay the baristas is likely to be different from how the baristas might see it.
Will her view be seen as "genuine"? Or will the baristas' view be more "genuine"? The question would have to go to the Employment Relations Authority to be decided.
Hope says "I am sure most small businesses would not want the hassle of having to go to the authority to work out employment agreements. There is a great deal of concern about these new rules that in effect make collective bargaining compulsory for employers.
Bullying employers into collectives should play no part in modern workplace rules."
Business NZ believes these rules are in breach of international conventions that say collective bargaining should be voluntary, and has formally asked the Government to drop them from the bill.
Port of Tauranga CEO Mark Cairns says "removing the ability to opt out of multi-employer collective bargaining remains our greatest concern. Ports are essential services for our small island trading nation, a long distance from our export markets."
● "There is a slippery slope once strikes and union action starts — look at Venezuela and other examples of how well this has gone" (lawyer)
● "The Government needs to be careful not to make human labour less attractive than machines or software alternatives." (telco boss)
● "Watch for the dynamic response from businesses. Water will flow around this rock." (energy boss).
Skellerup Holdings CEO David Mair believes the proposed changes are a disaster for larger companies that need to remain focused on customers and competitors.
On pay negotiations, Mair says all thinking New Zealanders would want nurses to be paid more for a difficult job in difficult circumstances. In his view teachers need to move to performance pay.
"This equal outcome approach is why we are drifting down towards the average (which keeps going down)."
Beyond this CEOs are concerned the Government has opened the gate to widespread action and uncontrolled wage increase expectation.
Matthew Cockram of Cooper and Company (NZ) says the Government is having to accommodate the consequences of their own rhetoric and pacts they have made with their union friends.
"The Government is in a no-win situation and the unions are pretty bolshy at the moment" — CEO.
When asked in the Mood of the Boardroom survey whether they were concerned by any of the proposed changes to employment law, the CEOs responded like this:
72% were concerned about the requirement for business to take part in collective bargaining and to reach agreement with unions on outcomes
73% were concerned that businesses are not allowed to opt out of multi-employer collective bargaining
76% were concerned about unions entering the workplace with notification
70% were concerned that businesses with more than 20 employees are not allowed 90 day trials
42% were concerned that partial pay is not allowed in response to partial strikes
4% of the respondents were not concerned by any of these provisions.