Many commentators have labelled Labour’s new Fair Pay Agreements as a return to the National Awards of the 1970s. This description is in fact too gentle.
What Labour is proposing is far, far more draconian than any employment law of recent decades. It is really a return to the 1894 Industrial Conciliation and Arbitration Act, which was the first system of compulsory state arbitration.
The right for employers (and employees) to consent to their agreements will be removed. Ministerial appointees will basically be able to determine pay rates for any sector of the economy.
The threshold for a union to introduce a FPA is merely 10% of eligible workers or 1,000 workers. Even 10% is very low, but in most industries, the proportion can be far lower. There are 40,000 cleaners, so the threshold for a mandatory FPA is a mere 2.5% of cleaners.
Around 80,000 work in farming. A mere 1.2% of farm workers could effectively unionise the entire farm industry and force a national award on every farmer.
Over 100,000 work in the hospitality sector. Fewer than 1% of employees can force every cafe, restaurant and hotel in New Zealand onto the same terms and conditions – the cafe in Invercargill could be forced to pay the same as the top-end restaurant in Auckland.
Employers will have to hand over to the union the contact details of every staff member.
The key thing is that once a union collects 1,000 signatures for an FPA, then that entire industry is forced into an FPA. Not just forced into negotiations. The union can make outrageous demands no employer can afford, and if the employers turn them down twice, then a group of people appointed by the minister will determine the minimum pay and conditions for the entire industry.
No one likes strikes, but strikes are better than compulsory arbitration. If an employer and union can’t agree on terms and conditions, then they get to weight up whether to take part in strikes or lockouts rather than than accept a settlement they are against. But Labour is taking away the ability of an employer to say no. 100% of employers can reject an FPA, but it can still be forced on them by whomever the Minister appoints to decide.
The FPAs make unions very powerful. A union with as few as 1% of members in an industry can force an entire FPA on say 100,000 workers. Now you might think the workers get to vote on the FPA. Nope. Only the union does. Each employer affected gets a vote on the employer side, but on the employee side only the union gets a vote.
The FPAs are primarily about increasing funding to Labour. The law will allow an FPA to include increased wages for union members. This will of course lead to many more union members increasing the funding of those unions. And at election time they donate hundreds of thousands of dollars to Labour.
Nothing will stop Labour implementing this. Unions get to vote on Labour selections and leadership. It will be passed into law. All we can do is demand National and ACT commit 100% to repealing it, once there is a change of government.
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