The Government's workplace legislation, to be announced today, is an attempt to strengthen collective bargaining and ultimately lift wages.

The law will roll back many of the changes made under the previous Government, but it is unclear how much it will bolster union numbers, which have been dwindling since the national awards system was dismantled in 1991.

Speculation has surrounded the Government's Fair Pay Agreements and how similar they may be to the national awards system. An announcement is expected within a year, but Workplace Relations Minister Iain Lees-Galloway said a fundamental difference would be that Fair Pay Agreements would reflect the modern labour market, and likely be informed by multiple employers, rather than the old employer-employee model.

National awards were based on the principle that basic terms and conditions were best set by the collective involvement of workers, and extended to the whole workforce. They established minimum wages and conditions across industries, with a Court of Arbitration settling disputes.


Strikes were prohibited - though they often happened - and arbitration was compulsory.

The system began to unravel under the fourth Labour Government, which abolished compulsory arbitration in 1984.

"That effectively meant that employers could refuse to settle, in which case the award would expire and they could work at enterprise level," said Victoria University Professor Gordon Anderson, who specialises in employment law.

"There was still industry bargaining and a strong role for unions, but all of that disappeared with the Employment Contracts Act in 1991."

The ECA dismantled the awards system and placed greater emphasis on the direct relationship between the individual worker and the employer.

Union membership as a proportion of the labour force halved from about 42 per cent in 1991 to 22 per cent by the end of 1995.

Terms and conditions were reduced overall, but employers enjoyed more flexible workplaces, increased use of performance pay, and productivity increases.

Striking Fletcher workers. Photo / Jason Oxenham.
Striking Fletcher workers. Photo / Jason Oxenham.

A Parliamentary Library paper from 1996 found that the law saw at least a 17 per cent lift in job growth between 1991 and 1995, and a corresponding boost in economic growth.


But the average hourly wage fell from $30.53 an hour (in today's dollars) in 1991 to $25.38 an hour by the end of 2000.

Today it is $30.51 an hour.

The Helen Clark-led Government tried to move the balance of power back towards unions with the Employment Relations Act in 2000, which introduced the legal requirement of "good faith".

"It was the Employment Contracts Act with a happy face," Anderson said. "The good-faith provision had a positive effect, but it never seemed to increase collective bargaining coverage."

Union membership rose in real numbers, but stayed roughly static at about 21 per cent of the labour force.

The John Key-led Government made a number of changes, including bringing in the 90-day trial for new workers, but the underlying structure did not change.


Private sector unions lost the most workers; currently less than 9 per cent of private sector workers are unionised.

Overall about 18 per cent of all employees are union members - down from 21 per cent in 2010.

Anderson did not expect today's announcement to have much effect on collective bargaining.

"In the great scheme of things, if the Government wants to increase collective bargaining, it will have to be something more radical. And they'd have to do more to protect union recruitment. If you have no members, you can't bargain for them."

Fair Pay Agreements might be able to increase collective bargaining coverage, but whether it can be done in a way that is business-friendly will not be known until the details are worked through and revealed within 12 months' time.