Labour's president backs 5pc pay rise

Labour Party president Mike Williams has come out in support of the campaign by New Zealand's largest union for a 5 per cent wage rise, saying it is modest given the state of the economy.

But Prime Minister Helen Clark was yesterday more reluctant to comment on the Engineering, Printing and Manufacturing Union's drive, saying wage talks were matters for employers and workers, not the Government.

And she was sceptical that the campaign, launched on Sunday, would result in widespread industrial action, calling talk of massive disruption "hysterical".

But she said she hoped the targeted tax relief for 300,000 families in the Working for Families package starting on April 1 would be "taken into account" in any wage talks.

In announcing the EPMU's "Fair Share - 5 in 05" campaign, national secretary Andrew Little said it would settle no wage round for less than 5 per cent. The Council of Trade Unions has supported the call.

Last week, the influential Metals agreement talks, covering 2000 workers in 220 firms, broke down.

The first of a round of mass stopwork meetings will be held in Auckland on Thursday.

Mr Williams told the Herald yesterday that he would not be telling the unions to pull their heads in to avoid industrial disruption in election year.

Many unions have close links with the Labour Party and Mr Little is chairman of the party's affiliates sector council.

Mr Williams said telling unions what to do would be a waste of time, as they did their own thing.

"The key point is that they are independent democratic bodies who happen to have a relationship with the Labour Party."

He said a 5 per cent rise was "pretty modest" anyway, given the economy.

"And I would have to say ... some companies realise wages are going to have to move, because they are simply not attracting the workers."

Yesterday, Nelson Coldstore workers walked off the job and picketed for three hours for a pay rise. Service and Food Workers Union assistant national secretary Neville Donaldson said it was the "first shot" in the national campaign for a decent wage rise.

ANZ/National Bank chief economist Dr John McDermott warned yesterday of possible interest-rate rises from the wage drive and said the union's call would "un-anchor expectations".

"These kinds of headlines and these kinds of expectations will be uncomfortable news for the Reserve Bank."

The Reserve Bank wanted to keep wage expectations in check so inflation stays in the 1-to-3 per cent target. The next interest rate review decision will be announced on Thursday of next week.

Wholesale interest rates rose slightly yesterday, as the market priced-in a higher chance that Reserve Bank Governor Alan Bollard would react to the campaign.

The National Party says workers should push the Government for tax-cuts instead.

But Mr Little said calls for workers to seek tax cuts instead of a fair pay rise were "transparently manipulative".

He said tax levels were a different issue to businesses sharing the profits with those who helped make them, and anyone advocating tax cuts should be prepared to stand in front of workers and tell them what state services should be cut.

Meanwhile, as part of the campaign, a mailout started yesterday to the EPMU's 50,000 members. Advertisements will appear today and tomorrow in major daily newspapers.

Unions in workforce

Union membership in 2004 was 342,000.

This represents 21 per cent of the workforce.

Private sector union membership is 12 per cent.

Source: Council of Trade Unions