Labour's wage boost plans

Updated

Critics say Labour leader Andrew Little's employment plans will send New Zealand back to the dark ages. Photo: Lynn Grieveson

Labour’s election-year employment policy includes a minimum wage bump, the retention of 90-day trials, and industry-wide employment standards that have the business world fearing a return to the 1970s. Shane Cowlishaw reports.

Worker’s rights have always been at the heart of the Labour Party.

With an election fast approaching, its plans to help the portion of its voter base that is struggling to survive were always going to be critiqued carefully.

The announcement, made Thursday afternoon at the E tu union’s Auckland headquarters, contained some predictable policy.

Raising the minimum wage by 75 cents to $16.50 was a move that will please many low-income workers, while the party committed to working towards lifting the rate to two-thirds of the average wage as economic conditions allowed.

Labour will also spend $15 million to pay core public sector workers the living wage and $9m to double the number of labour inspectors to 110.

It will also keep National’s 90-day trial period initiative intact, but introduce a safeguard in the form of a referee service to mediate disputes that arise during the trial period.

Leader Andrew Little did have one surprise to spring, in the form of Fair Pay Agreements (FPAs).

These would determine standards of pay and employment conditions within entire industries, to be negotiated by businesses and unions.

The aim, Little said, was to set a floor that would stop a “race to the bottom” seen in some industries, where good employers were undercut by bad employers who cut costs through low wages.

The policy’s release was followed by a flurry of press releases from both sides of the debate.

Unions threw their support behind the initiative, which they had likely played a part in shaping, saying it would restore fairness.

Meanwhile, Business NZ and the Employers and Manufacturers Association were quick to raise their concerns that the changes could see a return to an old-fashioned approach to industrial relations.

Industry-level negotiations the kicker

Raising the minimum wage will grab the headlines, but the most radical part of the package was the announcement of the FPAs.

Dr Stephen Blumenfeld, of Victoria University’s Centre for Labour, Employment, and Work, said the approach was common in Europe but not in North America or Asia.
Labour will see an extra 75 cents an hour in the pockets of New Zealand's lowest-paid workers. Photo: Lynn Grieveson

Labour had promoted something similar before previous elections, but it had always been attacked by National - who raised the spectre of a return of large-scale industrial action.

Blumenfeld doubted that would occur if FPAs were introduced. An FPA would not take place until the majority of workers in an industry decided to support it.

“There’s unlikely to be a strike - unless employers want to strike,” he quipped.

Blumenfeld said the real issue why the system was abandoned in the first place was because employers could not compete internationally due to high wages.

New Zealand ditched the national awards system – where central agents set industry pay rates - in 1990 following a string of major strikes in the 1970s and 80s.

Labour’s FPA plan would see negotiations in an industry begin once a sufficient percentage of employers or employees called for one.

Little told Newsroom that the exact threshold had yet to be determined but it would not apply to every industry.

He said many employers had told him they did not want to get caught up in a race to the bottom with their competitors around low wages.

In response to claims the policy would set New Zealand back, Little said the current government was doing that already.

“We’ve had the dark ages for the last nine years, they’ve (the Government) done nothing to lift the pay for lower wage workers.”

Economic Development Minister Steven Joyce couldn’t resist raising Labour’s bungled foreign-intern snafu, which saw some of the students involved complain about their poor living conditions.

“It’s not for me to offer them political advice but I probably wouldn’t have thrown this out this week, they’ve just been exposed as possibly one of the worst at looking after people that are working for them and to bring this out in the same week is actually quite unbelievable.”

He described the FPA policy as a major policy mistake that was a return to a system that, along with a rapid rise in the minimum wage, would see job losses.

Trial period U-turn confirmed

Labour's stand on 90-day trial periods is slightly less surprising - having been signposted in the past - but confirmation that they would retain the Government’s trial periods policy is still a reversal from the party’s line following the introduction of trial periods in 2009.

The policy allows small employers to dismiss a new employee for any reason as long as it is not discriminatory or in breach of good faith. (Corrected to make clear the policy applies to all employers)

It was intended to encourage employers to hire workers who they usually would skip over, but both Labour and the unions were steadfast against the change and maintained they wanted it scrapped.

In 2015, not long after becoming leader, Little hinted he was not opposed to keeping the policy if it could be made fairer.

Those tweaks arrived on Thursday.

If elected, Labour will create a new referee service at the cost of $4m to provide an avenue for employees fired during or at the completion of a trial period to take a case of unjustifiable dismissal.

The referee would hold short hearings without lawyers and be able to make decisions to reinstate a worker or award damages.

Little said there had always been probationary periods in contracts but this change would restore rights to workers while protecting employers who did not want to be caught up in expensive legal proceedings.

Restoring rights to low-paid workers will resonate with many, but how voters (especially those who remember the disruptive industrial action of the past) react to a policy steeped in the past remains to be seen.