Craig Renney: Setting the story straight on Fair Pay Agreements & More News Here

OPINION:

This week, the battle for higher working circumstances continued, with the Fair Pay Agreements Bill being heard by the choose committee. This step ahead gave rise to a different spherical of predictably ill-informed complaints about
the invoice. So to assist get the report straight, can we undergo what Fair Pay Agreements are and what they are going to do?

Fair Pay Agreements are merely a mechanism by which minimal phrases and circumstances may be set throughout an {industry} or occupation. FPAs do not take away flexibility for employees. Employees will proceed to barter their employment settlement with their employer. FPAs will create a ground for points, together with pay, which means nobody will get left behind. This course of helps to cease working folks from being exploited. Flexibility for too many employees in New Zealand means flexibility for the firm, not flexibility for them or their household.

As a employee, FPAs is not going to restrict your pay, or pressure you to be paid the identical as your colleagues. Again, all they do is create an industry-wide agreed upon minimal price. This helps deal with gender pay equality and helps ship pay fairness. They do not cease you getting a pay rise since you labored arduous or put in additional hours. Nor would the commerce union motion need that both. Not that you should be a commerce union member – nothing in the FPA Bill requires employees to hitch a union or to get a profit from becoming a member of.

FPA’s are negotiated straight by employers and staff – not by so-called Wellington bureaucrats. They then should be then ratified by either side in a vote. The International Labour Organisation (ILO) checked out this in February this 12 months and mentioned that the proposed system was advantageous. Many abroad jurisdictions have sector-level bargaining and thriving small enterprise sectors – which helps present how FPAs can profit small companies

They will not add price or take away jobs. Five of the six OECD nations with unemployment charges decrease than New Zealand have some type of {industry} stage bargaining agreements. The proof from the minimal wage right here in New Zealand is that minimal requirements in workplaces do not result in worse outcomes for employees. International proof on {industry} stage bargaining additionally helps FPAs. The OECD in 2019 mentioned that “Bargaining systems characterised by a high degree of wage co-ordination across bargaining units are associated with higher employment and lower unemployment for all workers”.

Some commentators have claimed that there’s nothing flawed with the labour market in New Zealand and that there isn’t any want for this reform. I feel that speaks to how out of contact they’re. The proof speaks for itself. Max Rashbrooke’s wonderful ebook Too Much Money on inequality in New Zealand reveals the hole between wages and labour productiveness rising throughout the interval between 1989 and 2020. It additionally demonstrates the falling share that labour is getting from the economic system in New Zealand – a story that’s not replicated throughout the remainder of the world.

For the previous 40 years, Australia has had nationwide awards that cowl the overwhelming majority of the workforce. Between 2004 and 2021 the median hourly wage for an Australian elevated 92 per cent – from A$18.80 to A$36. Across the identical timeframe in New Zealand the improve was 78 per cent. Australian employees additionally work fewer hours than New Zealanders – equal to 7 fewer days at work every year.

This sample isn’t just unhealthy for employees – the ILO measure of the output per employee reveals New Zealand persistently behind Australia over the interval between 2010 and 2020. R&D expenditure as a proportion of GDP has been persistently larger in Australia. Our economic system would not simply result in poorer outcomes when it comes to innovation. Our mounted capital formation as a proportion of GDP – the plant and equipment that drives progress – was decrease yearly than Australia between 1991 and 2019.

So why do FPAs help constructive outcomes? Put merely, beneath the present system unhealthy employers can drive out good employers. Competition in sectors with very related services or products (public transport for instance) pushes some companies’ try to realize a bonus by driving down labour prices. This will increase revenue, however does nothing for the workforce, nor for the wider wellbeing of shoppers. Where there’s a wage ground in a sector – as is proposed by the invoice, that competitors mannequin ends. Instead, companies compete on product, service, and worth. Everyone besides unhealthy employers wins on this foundation.

So, let’s cease pretending that FPAs are something aside from a change to convey New Zealand consistent with the remainder of the developed world. Let’s cease pretending that FPAs will hurt the economic system when the proof from abroad reveals in any other case. Working folks need to get again dignity and respect throughout New Zealand, and FPAs will assist ship this.

– Craig Renney is an economist and coverage director with the New Zealand Council of Trade Unions.

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