People in employment can usually expect benefits from a Labour Government and this one promises to be no exception. First, it will lift the legal minimum wage in April and annually thereafter, in larger increments than National has been raising it. Few will complain about this. Wages in this country are generally agreed to be too low and a statutory minimum means no employer need suffer competitively.

Most will be able to recover the cost by increasing prices or reducing staff, possibly a bit of both. The Government will hope its chosen rate of increase is sufficiently gradual to be absorbed without a surge in inflation or unemployment, or both. The Council of Trade Unions believes the wage increases will be a boon to business and the economy because the lower-paid tend to spend all of any increase they receive. So long as the economy remains as buoyant as it has been for the past five years, small employers will probably be able to afford to pay more and many will welcome the ability to reward valued staff a little better.

They may be more worried at the Government's proposals to change the law governing 90-day trials for new employees. Trial periods are to remain but no longer to be free of legal risk for the employer who finds the person unsuitable for any reason. In future the employer will need to justify the dismissal to a judicial body if the dismissal is challenged. In some large workplaces that is already the case and the law change might not make a difference in practice. But among small employers, the knowledge that 90-day trials are no longer risk-free could have a profound effect on employment incentives and deprive some job-seekers of a chance to prove themselves reliable.

Those who are marginal prospects might benefit, though, from relaxed drug tests that are said to stand in the way of many young people finding employment at present. The New Zealand Drug Foundation, among others, believes the tests are too stringent for cannabis and though relief is not part of the new Government's stated programme, it will probably be persuaded. Many employers might be a little more cautious.


The Labour policy that attracted most criticism from the employers' lobby pre-election was one that envisaged a return to industry-wide agreements setting base rates and conditions of employment in industries where a certain proportion of employees, yet to be determined, want such an agreement. The policy is intended to prevent firms bidding for contracts by lowering wages and conditions but it could end up closing opportunities for more efficient working arrangements and making industries as sclerotic as many were in the 1970s. But private sector employment is not nearly as unionised as it was then and industry-wide agreements will probably be seen mainly in the public sector and its contracted services.

There are also to be pay-equity agreements for services employing mostly women. Their pay and conditions would be linked to those in different but comparable work done by men.

The power is swinging back to labour but the Government still needs to take care. If the economy stalls, nobody will be better off.

13 Jan, 2018 7:45am
2 minutes to read