Published in Insights, The New Zealand Initiative’s newsletter, 8 June 2018
George Orwell would have had fun with the terms of reference of the Government’s Fair Pay Agreement Working Group. Practically none of these terms can be taken at their literal value, starting with the stated purpose.
According to the document, the working group is meant to “make independent recommendations to the Government on the scope and design of a system of bargaining to set minimum terms and conditions of employment across industries or occupations.”
So this is not an exercise to determine whether such a new system of bargaining is required in the first place. The working group’s only purpose is to determine how to design it.
But the rest of the terms of reference make a bit of a mockery of the “independent” nature of the working group. That is because the terms are set so clearly that they leave little room for manoeuvre.
For instance, the group is bound to ensure that none of its recommendations could undermine union membership.
They should also mitigate risks like “unreasonable price rises for some goods and services if increased labour costs are not offset by productivity gains and profit margins are held at existing levels.” It makes you wonder what “unreasonable” might mean in this context – and whether decreased profits are always preferable to price increases.
The Government’s strange understanding of economics also shines through in the following gem: “When we lift the conditions of New Zealand workers, businesses benefit through improved worker engagement, productivity and better workplaces.”
Hooray, one might think, the Government has found the key to higher productivity! And it is, drum rolls, paying workers more!
Of course, employers would love to see higher worker engagement, increased productivity and better workplaces. And now the Government tells them that it is simple: Just pay your staff more and everything will miraculously improve. If that is not enough of an argument to make it happen, the new fair pay agreements will force unenlightened employers to do so.
The outcome of this working group exercise is predetermined in the terms of reference – and specifically in their background paragraphs. The new Fair Pay Agreements are all about lifting wages, increasing union power and restricting the ability of individual employers and employees to negotiate for themselves.
It has little to do with “fair” or “agreement”. But that is the newspeak of labour market re-regulation, appropriately chaired by a nominally conservative ex-politician.
