The Government is taking us back 127 years to 1894 when the Liberal government introduced compulsory arbitration.

Centralise and control. This Government’s answer to everything.

The proposed Fair Pay Agreements (FPA) is centralised wage fixing.

The Minister for Workplace Relations, Michael Wood, in his Cabinet paper says: “Where mediation was not successful, parties could seek a binding decision from a body such as the Employment Relations Authority”.

The Authority will be able to fix wages and conditions nationwide of any sector the Government deems to have “harmful labour market conditions” or if “10 per cent or 1,000 workers (whichever is lower) in the nominated sector or occupation” are union members.

So, for example, 1000 union members in the three TV channels could set the conditions for the country’s film industry and kill off independent film-making.

No one is safe. Wood told Cabinet: “I intend to bring policy proposals back to Cabinet to include [contractors] at a later stage”.

The David Lange government recognised the economy was too complex to set wages centrally and abolished arbitration in 1987. A decision greeted with relief.

With the internet, computers, automation, artificial intelligence, and working from home the economy today is even more complex.

The changes will do enormous economic damage. No one who experienced compulsory arbitration would advocate its return.

Prime Minister Jacinda Ardern was 6 when we last had arbitration. Strikes were a daily part of life. Cabinet’s median age is 47 and not one minister has experienced centralised wage fixing.

Minister Wood is a former trade union organiser. His private sector experience is as a Christmas tree salesman. His claims in his Cabinet paper justifying compulsory arbitration are false.

“Fair Pay Agreements will improve wages and conditions for employees,” he said.
“New Zealanders working in critical roles like cleaners, supermarket workers, and bus drivers … have been undervalued”.

“In some industries or occupations … [there is] a race to the bottom”.

The minister’s evidence? No facts, just gossip. “I have heard from the cleaning, security and bus driving industries,” he said.

Economist Dr Bryce Wilkinson and Roger Partridge have done the research for the New Zealand Initiative. Real wages have been climbing since the end of compulsory arbitration. Wages fell in the 1970s and 80s under national awards. “Income inequality before taxes and transfers has actually declined in New Zealand since the 1990s”.

They find “New Zealand’s current labour-market settings are working very well. Unemployment is comparatively low when measured against our OECD peers. Labour market participation rates are among the highest in the world. Wages are tracking productivity growth. And real wages for all wage-deciles have been rising since the labour market reforms in 1991”.

Economic hardship in New Zealand is due to the failure of the Government’s housing policies not the labour market.

When I started work we had compulsory arbitration. To be represented in arbitration we were compelled to join a union. As a student I had a part-time night job as a cleaner for a pittance. Relatively cleaners earn far more today. When I started in a law firm I was paid $30 a week, $3 extra because I had an honours degree. I had to join the Law Clerks Union which took a weekly fee for having negotiated a pay rate less than the dole. So much for the claim that fair pay agreements will end low pay.

Over summer I worked in the freezing works. Industrial relations were terrible as was productivity. The union delegate was our real boss. Every day he would order a go-slow so overtime was needed to process the day’s kill. Once we worked one minute of overtime we got paid for an extra hour and a half. Then the delegate ordered a speed-up. We never worked more than an extra 20 minutes.

Why will industrial relations be better this time around?

“Industrial action cannot occur during Fair Pay Agreement negotiations” says the minister. He is deluded. Strikes were illegal under compulsory arbitration. They were a daily fact of life. The minister can threaten workers with $10 thousand fines but people will not accept unions dictating their wages and conditions.

It is a trade union wish list to make unions relevant. “Employees will be represented in bargaining by registered unions”.

“Employers will be required to pass on the contact details of each employee … When an FPA has been finalised, all employers within coverage will be bound by it, regardless.

“Unions will be entitled to access workplaces (whether there are employees within coverage, regardless of whether they are union members)”. Employers must pay for union stop-work meetings.”

Here is the kicker – “bargaining sides can agree to include a preferential payment in the FPA for union members”. Unions will be able to bargain for, and if that fails, have the Authority require that employers pay trade union members more than non-union members.

It is compulsory unionism by stealth.

– Richard Prebble is a former leader of the Act Party and former member of the Labour Party.

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