Minister supports a reset of the Employment Relations systems and Fair Pay Agreements are the start

The Government’s announcement on May 7 of the Fair Pay Agreements, while following the seminar by three weeks, came as no surprise to those who attended CLEW’s 50th Anniversary seminar - ‘Is it time to reset our Employment Relations Systems?'

In his keynote address, Hon Michael Wood, Minister for Workplace Relations and Safety, commented that the IR system needs to ‘more fairly share the benefits of the system’. He noted that in recent ‘COVID times’ it is those workers on the lowest wages whose work was essential and yet have been more ostensibly affected by the system.

The Minister outlined what he described as a ‘dual critique’ of the current system –

  1. the current system raises questions about the impact on workers – the Minister pointed to the decline in labours’ share of income and increased inequality since 2000s; and
  2. the reforms of that time (ECA) didn’t deliver as intended. This is measured in the lack of productivity, which has weakened over time. There has also been a loss of centralised bargaining and weakening of collective bargaining.

By contrast, the Minister noted that Australia have retained better productivity while retaining elements of its centralised awards system.

Minister Woods laid out his rationale for Fair Pay Agreements (FPAs). He sees ‘Fairer, safer and more productive work’ is needed in New Zealand. He further commented, ‘NZ cannot continue to grow where large numbers of workers are left behindthe future of democracy depends on having economic justice’. In his view ‘FPAs’ are part of that picture. He noted that NZ’s ‘competitive advantage should be based on equality not lower wage costs’. He indicated the design of a fair wage system through FPAs would be forthcoming.

In considering the reset of ER systems, the Minister pointed to the future of work and the changing nature of work such as the emergence of casualised forms of labour and the gig economy. He warned that ‘in these covid time we would need to accept that there will be on-going economic shocks’. In his view this raises the question as to how we build up a labour market that is more resilient to these shocks? In response, he said that a significant work programme had commenced and that he had plans to take that forward with the social partners and that a social insurance model may be part of those discussions.

He also commented on the dispute resolution system. While quite successful in the past, we need a system that resolves disputes as quickly as possible and where engagement is comfortable for both workers and employers.

Minister Woods concluded, ‘Yes, I do think the time is right for a reset’ and that ‘the government has a programme of reform underway to meet the challenges ahead’. The Fair Pay Agreements announcement maybe just the first significant proposal from Minister Woods in the reforming of the employment relations systems.