The business community is quite rightly concerned. In the latest Quarterly Canterbury Business Survey, Fair Pay Agreements rank among labour market shortages and supply chain constraints as the big issues which are predominant in the minds of employers – and there are a number of reasons why.
Let’s go right back to the beginning and ask the question that should be asked of all legislation. What is the problem that it is trying to solve? That question has never actually been answered to the satisfaction of the business community – because whilst we know what Fair Pay Agreements will do, many just do not understand what Fair Pay Agreements solve.
Relative to other countries, employment conditions in New Zealand as they stand are among the best. We have a robust employment relations system, we have minimum standards in the form of minimum pay which progressively increases every year, we have rules and regulations to protect employees, we have generous leave entitlements and a system which protects vulnerable workers.
We also have the ability for both employers and employees to negotiate employment agreements, and terms and conditions, that can be tailored to suit the needs of both parties. That agility and flexibility is particularly important at a time like this, when our economy is under pressure from multiple fronts. We are seeing employers go to great lengths to provide strong workplace culture and practice and to accommodate flexibility, all of which works for both employees and employers. It is important to recognise that this does come at an additional cost to businesses, who funnily enough, do actually want to pay higher wages and increase their productivity. You can’t legislate that.
Yes – there has been a noticeable surge in industrial action and strikes in the past five years compared to recent decades. Our teachers and our healthcare workers, in particular, have been raising concerns with their conditions, and their pay, and quite rightly so. But it is important to consider who employs these sectors. It is not private business.
Fair Pay Agreements, or collective bargaining, have existed in New Zealand previously. It is not a new concept. Some readers might recall National Awards and how successful they were. Commentators have previously remarked that FPAs signal a return to the 1970s for this reason, and that is not necessarily something that anyone wants and it’s not because of the fashion. Have we not progressed considerably as a country since the 1970′s, and that includes the environment in which our businesses and employees operate in and their expectations?
So, why are many businesses so opposed to this – given at the end of the day, we want a productive economy where our people are paid well? There are two main reasons.
The first is that Fair Pay Agreements are not entirely fair. All it takes is either 10 per cent of all employees in a given sector, or if that number is too high just 1,000 employees will do the trick, to set off the process. If no one wants an agreement at all, the Ministry of Business, Innovation and Employment can decide to initiate one anyway, if they think it is in the public interest. It does not require a majority of employees to agree. So, even if you don’t want one, you might just get one anyway.
Once the bargaining process is initiated, and if an agreement is ratified for a given sector, the requirements within it are enforced across the entire sector regardless of the individual circumstances of either the employer or the employee.
Is it fair that the same standards will apply to a multinational conglomerate with an office in Auckland, and to the small business with part time employees in Dunsandel or Little River? At a time when small businesses are struggling with additional costs coming from every direction, it is not going to be easy for some to absorb.
The second reason why businesses are concerned relates to the implementation of Fair Pay Agreements and the convoluted bargaining process. Once the bargaining process is initiated there is no stopping it, and with it comes a raft of obligations on the employer.
Contact details of employees have to be handed over to the union who has initiated the process and union representatives suddenly have access to the workplace to engage with employees. They don’t have to ask for permission. How is that going to work at a meat processing plant, or the hospitality business that is so low on staff that operating hours have already been reduced?
Fair Pay Agreements represent another barrier, another challenge, another burden for business and another worry to think about. Businesses are doing their best to recover from the significant impact of two years of Covid-19 restrictions and the economic consequences associated with that. They are grappling with labour market shortages at a critical level, and inflationary pressures continue to drive up costs. More compliance and more rules are not going to help. They are only going to make it worse.
- Leeann Watson is the CEO of the Canterbury Employers’ Chamber of Commerce.
