Labour's 'absolutely fundamental' promise to unions seems to have been parked

Iain Lees-Galloway says Fair Pay Agreements remain Labour Party policy but a consultation paper released this week does not commit the government to progressing them. Photo / File

COMMENT:

For well over a year, Iain Lees-Galloway has spoken of his hope that Fair Pay Agreements (FPAs) could endure a change of Government.

But the entrenched positions of unions and business groups shows how remote the odds of this is.

The decision this week to put the issue back out for consultation does, as the National Party argues, look like the issue has been "kicked for touch" until after the election, at least.

FPAs are a proposed type of agreement where an entire occupation or sector could be covered by an agreement negotiated between unions and employers.

For New Zealand, something of an outlier when it comes to the lack of sector-wide bargaining, FPAs could represent a significant shift in industrial relations.

They could also give a kind of structural significance to unions, because officials would negotiate nationwide agreements with representatives of the sector.

For employers, the concept of the agreement is more stick than carrot.

Once negotiations are kicked off, either by some sort of representative test (the proposal of the working group was one in ten workers indicating they want one) or a public interest test, a deal will be done.

If agreement cannot be reached between unions and industry through negotiation, it will go to arbitration and the decision is final.

The Council of Trade Unions (CTU) is making no secret of just how crucial it is that Labour carries out its promise to introduce them, repeatedly claiming that in certain sectors companies compete by cutting the conditions of workers.

"This is absolutely fundamental, in our view, to achieve a fairer share of the economy [for workers]. We can't get that, in our view, without this," CTU president Richard Wagstaff said.

"We don't see any country in the world who has a decent share of the economy without industry coordination of [workplace] bargaining. You just can't do it. No one else has done it."

Wagstaff both welcomed the consultation paper and described the CTU as "impatient" to see progress, believing the current round of consultation is unnecessary but if it had to happen, could have started sooner.

Meanwhile John Milford, chief executive of Business Central, part of the BusinessNZ network, said the agreements would be "bad news for employees, employers and New Zealand's economy as a whole".

One thing they agree on, is how central it is to the nature of FPAs that the agreements are compulsory.

Iain Lees-Galloway (left) and former National Party prime minister Jim Bolger at the release of the Fair Pay Agreement working group report in January. Photo / File

"Fair Pay Agreements need to apply to everyone, both employers and workers, in an industry or sector so standards are maintained for workers and no cowboy employers undercut the competition with cheap labour," the CTU wrote in a report released this week.

Milford meanwhile said a compulsory framework would be a "one-size-fits-all approach" which would not suit different businesses in different areas.

"The working conditions people in Whanganui want are not the same as those in Auckland."

Although Workplace Relations and Safety Minister Lees-Galloway continues to express a desire for them, the consultation paper he released this week gives no clear indication of the Government's commitment to moving ahead.

"We are working to improve the policy design before we consider progressing with the legislation necessary to get a Fair Pay Agreements system up and running."

He has also refused to say whether legislation to bring the FPA process into effect will be introduced to Parliament before the election, saying how long the process took was out of his hands.

If it does eventually get introduced into Parliament, there will be a select committee process which will include yet another round of consultation for the public.

While he has stressed the importance of getting the design of FPAs right, it is not as if he was not warned that the process was back to front before.

When he want to Cabinet to seek approval to establish the working group (which would deliver a report in which unions and employers were divided), Treasury warned they were asking too much of it.

"Initial work by officials has not identified an occupation or industry in which the proposed system would address wage or productivity issues; and the working group is being tasked with answering foundational policy design questions."

Instead of forming the working group, Treasury suggested more design work be done and to establish what impacts the agreements may have on the economy.

But Lees-Galloway pushed ahead, even expressing hope early on that worker and employer representatives could reach consensus on the way forward.

When the working group reported back, he would not be drawn on when the Government would respond.

To wait until now to seek a round of consultation makes it clear that despite FPAs being a core promise of Labour to the unions, the Government is not certain it wants to push forward.