Govt to consider Fair Pay Agreements recommendations

Workplace Relations Minister to consider recommendations made by Fair Pay Agreements Working Group.

Workplace Relations Minister Iain Lees-Galloway said the government will consider the recommendations made by the Fair Pay Agreement Working Group, following the release of the group’s report today.

The Fair Pay Agreement working group, chaired by former Prime Minister Jim Bolger, comprised experts in economics, collective bargaining and employment law, along with representatives of workers and business.

The Fair Pay Agreements report proposes a system of industry-wide collective agreements for New Zealand workplaces, which the group says “will be most useful in sectors or occupations where competition is driving a ‘race to the bottom’ in terms of wages and conditions.”

The recommendations in the report address the initiation of bargaining, coverage and scope of the agreements and the bargaining rules and processes of negotiations.

Collective bargaining was among one the recommendations outlined in the report, with the group suggesting workers should be able to initiate a Fair Pay Agreement collective bargaining process if they can meet a minimum threshold of 1000 people, or 10 per cent of workers, whichever is lower, in the sector or occupation.

Lees-Galloway, who first announced the establishment of the group in June 2018, said the government is now in the process of  considering the recommendations.

“The next phase of work will require detailed policy consideration and consultation and we’ll take the time to get it right,” he said.

“Right now, employers who pay their staff a fair wage are being undercut by competitors paying below a fair rate. It’s a classic race to the bottom that’s damaging people’s prospects and holding many industries back.

“That’s why I directed the Fair Pay Agreement working group to recommend the scope and design of a system of bargaining that sets minimum terms and conditions of employment across industries or occupations.

“The model that the working group has proposed would facilitate conversations not only about fair wage rates but about training pathways and opportunities to increase productivity and profit.

“The report outlines the challenges in making policy changes around fair pay. New Zealand is out of step with the OECD both in terms of income inequality, and productivity, with Kiwis working longer hours but producing less per hour worked than those in most OECD countries.”

Sarah McBride CEO of the Building Service Contractors Association of New Zealand (BSCNZ) said the proposed Fair Pay Agreements would have a significant impact on the commercial cleaning industry.

“It is clear the Fair Pay Agreement [FPA] working group is very split in their opinions, this hopefully should raise alarm bells as the government reviews these recommendations,” she told INCLEAN NZ.

“The government’s ambition to protect workers is admirable, but is FPA the way to achieve this when we already have a system of collective bargaining in place? We understand the cleaning industry would be one of the first targets for FPA, so this will have a big impact on our industry.

“[The report] states FPA bargaining can be triggered by ‘representativeness’ in any sector or occupation if they meet the minimum threshold of 1000 or 10 per cent of workers in that nominated sector or occupation.

“From the last census there were 40,476 workers identified as working in the building cleaning industry. How could 1000 workers represent such a great number? That smaller majority shouldn’t have the power to dictate to an entire sector or occupation.”

McBride said the global structures considered in the report included the Australian Modern Awards system; the Nordic model; the Continental European model and Singapore’s Progressive Wage Model, which would all “need serious consideration” to be applied in NZ.

“Each of them have merits which would need serious consideration as to whether these would work in the New Zealand environment.  We don’t currently have the right infrastructure in place to monitor the current employment laws, yet alone introducing a whole new structure. ”

McBride said to implement Australia’s Modern Awards, which are determined in consultation by the Fair Work Commission and reviewed periodically by the Commission, in NZ would require “massive administrative infrastructure, body of industry experience and sector knowledge”.

“Our current laws also do not offer effective protection to workers that are categorised as ‘freelancers’, ‘subcontracting’ and ‘franchising’, where holiday pay, ACC fees, parental leave, sick pay and Kiwi saver are all avoided. Should we not review laws to protect them first before inflicting more infrastructure on businesses that are categorised as having ‘employees’?

“BSCNZ members work to better the industry for their staff, but moving forward all ‘workers’ within our industry need to be taken into consideration. Plus the fact the current laws aren’t being adhered to by some in our industry, even the infrastructure for monitoring this is not yet been effectively put in place.”

BusinessNZ said Fair Pay Agreements would bring risks to business and the economy. CEO Kirk Hope said the compulsory nature of Fair Pay Agreements and the risk of industrial action and productivity loss are key concerns.

“Being covered by a Fair Pay Agreement would be compulsory for everyone in an industry or sector. We disagree with this and think the decision to enter any employment agreement should be voluntary.

“Fair Pay Agreements would limit business flexibility, as a collective covering every business wouldn’t be able to meet the needs of individual firms. Businesses that wanted differently would have to negotiate separate agreements on top of their fair pay agreement, and this secondary bargaining would increase the risk of industrial action, as happened with similar rules in the 1970s.

“There would be risks to productivity because everyone would have to attend paid stop-work meetings to agree on their fair pay agreement. All employer representatives on the working group were concerned that about the consequences and costs of this.”

Hope said employers would want to see significant changes to the proposals to address the likely risks to business, jobs and growth.

Business Central said employees and employers will have rights and flexibility stripped away from them should the Government adopt the recommendations.

“Handing the ability to set pay and conditions for an entire sector of the economy to just 10 per cent of its employees is untenable in a 21st century democracy,” Business Central CEO John Milford said.

“Employees value the ability to negotiate directly with the companies employing them so they can arrange for flexibility such as tailored working hours, individual conditions best fitting their family circumstances, and additional training and development.”

“Forcing the same pay and employment conditions on all companies in a sector deprives them of the ability to innovate and outperform their competitors. For example, an employer might seek to introduce rostering flexibility in exchange for higher pay.”

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