Compulsory, Unionism by Stealth

Tuesday’s NZ Initiative report confirms so-called ‘Fair Pay Agreements’ will be compulsory, centralised unionism by stealth.

Fair Pay Agreements will force all workers in an industry to go into union negotiations if just 10 per cent of workers in the industry are in favour. Let’s be clear, that is compulsory unionism by stealth.

This will be a return to 1970s style National Awards. They didn’t work then and they won’t work now. Changing the name won’t change the fact they are bad for the New Zealand economy.

The Government and its working group have tried to justify the need for these compulsory, centralised Fair Pay Agreements on four claims: a falling share of income going to labour, rising income inequality, a race to the bottom for wages and low productivity.

The report clearly shows these claims are either blatantly false or that Fair Pay Agreements will not fix them.

The share of income going to labour has not declined since the 1991 labour reforms. Income inequality has not risen in three decades. And there has not been a ‘race to the bottom’ for wages, in fact, every single income decile has had real wage increases since the 1991 reforms.

New Zealand’s low productivity pre-dates the 1991 labour market reforms and is a symptom of other problems, Fair Pay Agreements will not fix this. Even the OECD in its recent report on our economy confirmed this.

Business confidence is already at 10-year lows. This government’s bad policies and decisions have dragged business confidence back to the lows we saw in the depths of the Global Financial Crisis. The threat of this will do nothing to help confidence improve.

Labour wants higher union membership because the unions are the largest funders of the Labour Party.

The government needs to dismiss this wacky idea. It is becoming increasingly clear these changes will cause a boom for unions but will damage New Zealand workers and businesses. New Zealand needs a flexible labour market that respects individual rights to negotiate contracts and doesn’t require compulsory unionism by stealth.