Industry needs to get closer to the skills generation machine and remove mismatches in the workforce, says BusinessNZ chief executive Kirk Hope.
BusinessNZ is calling on the government to abandon its Fair Pay Agreement proposal, saying it will only "add rigidity to the tight labour market".
Hope says the proposed agreement would not help anyone. "It's an extremely rigid tool. If the government is worried about pay conditions of vulnerable workers, then there is a better way than the Fair Pay Agreement.
"I can't see a rational policy base for doing this, and I'm not sure the government is that clear on the solution it is looking for. I think they made a promise to the union, and that's why they are doing it."
Hope says following the implementation of the agreement, employers will lose flexibility — some will pay more, some will pay less.
"Take the cleaning industry, for instance, half of the workers are in a multi-employer collective agreement. A fair pay agreement wouldn't do much for one half and not touch the other half.
"Bus drivers and aged care workers are publicly funded, and there's chronic under-funding in these areas."
The proposed Fair Pay Agreement system would bring together employers and unions within a sector or industry to bargain for minimum terms and conditions for all employees. The proposed system would include support for parties to help them navigate the bargaining process and reach an outcome, as well as processes to ensure compliance.
If 10 per cent of a workforce or 1000 workers agree, a new Fair Pay Agreement can be enacted. The Fair Pay Agreements Bill is expected to be introduced later this year.
Hope says his organisation made a range of suggestions during the consultation phase, but they have been completely ignored. Pay agreements should be voluntary, not compulsory, and they should meet international obligations.
He says the challenge for many businesses right now is how to meet the growing rather than shrinking pains. "The pains of economic growth within a constrained labour market were not something we were looking at a year ago.
"If you are growing and have demand for your products and services, how do you meet them and how long will the demand last? It may be cyclical, and there is a sense of frustration of wanting to take advantage while the demand is there.
"We have a skills gap that presently can't be met in the domestic market. Essentially businesses have to increase salaries and wages to get someone to fill the job. And the pay may not be directly related to productivity.
"This has an impact on costs over time. We are seeing the fastest rate of inflation in 10 years, and I'm sure everyone in the (Mood of the Boardroom) survey will be reflecting on the pressure this puts on wages and salaries."
Hope says the New Zealand education system hasn't been able to meet the labour demand, and we need to rely on international skills at the moment — that's really challenging.
"We are in the middle of vocational reform but the reality is that we have had skills mismatches for a long period. The education system has operated from a learner perspective, not industry perspective.
Industry needs to get closer to the heart of the skills generation machine." Hope says at present there are skill shortages right across the board — from auditors, engineers to hospitality and health workers.
The agriculture and horticulture sectors are reducing production because their workforce is getting tired. Restaurants are not opening on certain days because staff needed to have time off. "These are growing pains, not shrinking pains," Hope says.
He backs the Government plan of increasing the vaccination rate and reconnecting New Zealand with the world in 2022. "There is a pathway and the important touch point is getting the percentage of the population vaccinated as the government re-opens the border."
But there is a need to get more skilled people in the country right now. "There are 50,000 applications or more from people who want to come and work here. The applications are not being processed while the border is shut.
"How long will this pipeline last? We may have an outflow of people. Other countries have skill shortages too and will we be able to hold on to these people?"
Hope says some of the signalling from the government needs to be a little different, and the country should remain open to low and mid-skilled migrants. "We need them to grow the economy, and the government should focus on more growth rather than redistribution policy in the post-pandemic world."
Kirk Hope's top three issues
Vaccine rollout: How New Zealand reconnects with the world.
Greater use of saliva testing: At the border and also more tracing technologies ( such as mobile phone/Eftpos tracking).
More growth: Than redistribution-focused government policy.