I know a guy who runs a few bars and cafes in Wellington. They're popular places. If you've been to the capital, you'll probably have been to one of his establishments.

He gets passionate when he talks about trying to do the right thing by his staff. He wants to pay them the living wage. But he's finding it hard.

The trouble is that bumping up their pay means bumping up the price of his flat whites and vodka sodas. It might not be by much. It might only be 20 cents a drink. But he reckons that's enough to send a customer down the road.


And down the road there's another cafe or bar not charging the extra 20 cents because it's not paying its staff a living wage.

And that's his problem. He may want to pay his staff more, but he can't if he wants his businesses to be competitive.

That, in a nutshell, is at least part of the reason Kiwis are paid so badly. It's because employers have driven pay rates down in a bid to be the most competitive. The cheapest service. The cheapest product. Whatever it is, at least some of it is on the backs of cheap labour.

It's how Transit allegedly recently won the contract to run some of Wellington's buses. It's accused of undercutting competitors to offer a cheaper contract. How? By paying its drivers less for longer. Many existing drivers quit instead of taking that deal.

That's business.

And yet it doesn't have to be. The Government's Fair Pay Working Group wants to turn that around. In its report, released last week, it recommended a return to industry-wide contract negotiations.

There are fears the policies pushed for by the Government's Fair Pay Working Group could lead to more industrial action. Photo / NZME
There are fears the policies pushed for by the Government's Fair Pay Working Group could lead to more industrial action. Photo / NZME

Business is collectively losing its mind over the working group's recommendations. It's calling it a return to the national awards of the 1970s.

Business hates that the negotiations can be triggered by as little 10 per cent of the industry's workforce. Business hates that the contract agreements would be compulsory for all employers in that industry. Business hates paying employees more than it has to.


Business has a few fair points. We can't expect the cafe owner in Balclutha to pay staff exactly the same wage as the Auckland cafe owner making a killing thanks to the money and foot traffic a city delivers. There should be concessions to regional variance.

We also can't allow unions to strike at all during sector-wide negotiations. Can you imagine an entire industry coming to a halt? It'd be carnage. And while the report recommends banning strikes directly related to the negotiations, it still leaves scope for unrelated strikes. Unions could exploit that.

These recommendations probably won't all be accepted by the Government. Labour's coalition partner New Zealand First might challenge many of them, if not all. Winston Peters' party has already temporarily pulled its support on Labour's employment law once before.

And that's not necessarily bad. Overall, a few tweaks to placate business could be a good thing.

But, the motivation behind these recommendations is on the money. Kiwis are underpaid. We're so cheap to employ, Hollywood once labelled our local Lord of the Rings actors and cast "Mexicans with cellphones". The average Australian earns 32 per cent more than the average Kiwi. The last time we were paid close to the same as the Australians was the 1970s.

So maybe a return to the 1970s - or just one aspect of it - isn't all bad. At least, not for everyone.