The spectre of Fair Pay Agreements, also known as industry award payments loomed threateningly over the economy when the Fair Pay Working Group headed by Jim Bolger released its recommendations in December 2018. The issue seems to have slipped into the shadows since then, over-powered by this incompetent government’s continuous policy flops.

New Zealand is on the verge of employment policy dominating the news cycles again. The Council of Trade Unions is becoming impatient over the lack of momentum in this area and began flexing their muscles at the October 15th conference. CTU President Richard Wagstaff said, “The work on designing good Fair Pay Agreements has already largely been done by the Government’s Joint Working Group of unions and business. The Labour Party have pledged their commitment to Fair Pay Agreements, but action is needed to turn the concept into reality.”

 

Rather foolishly, Wagstaff pointed to the example of the equal-pay deal in the aged-care and support roles sector as evidence of existing industry-wide agreements working well. That is a sector where the purchaser of services is overwhelmingly the Government and funding the sector’s needs is not keeping up with cost increases which are largely the result of government policy. Mark Rouse, the General Manager of a retirement village in Waikanae, said in May that unsustainable staffing costs had increased as a percentage of income from 72% in 2010 to 90% in 2019.

 

There are an increasing horror stories emerging from the aged care sector. In the last week it has been revealed a 71 year old woman with an amputated leg died with maggots in the wound around her stump and in the dying tissue on her other foot. A 92 year old woman was found shivering in her urine soaked bed. The sector is struggling to deal with increased elderly obesity, with a quarter of those aged over 75 considered obese. There are calls to implement national standards of care across New Zealand rest homes but E Tu Union organiser Alistair Duncan says 83% of their members don’t have time to do their jobs properly.

 

Trade unions have highlighted supermarkets, security and cleaning industries as their next targets for action. If their model example of industry award systems is the aged care sector, that doesn’t bode well for the next sectors on their list. I suppose the only silver lining for the latter industries is that there are far more customers in those sectors and they aren’t the Government. That gives those employers greater ability to protect their margins however it is you and I that will be paying those costs.

 

However, I have noted it repeated by the working group, by the Minister, by the Council of Trade Unions ‘economists’ and any other ideological numpty who’s abilities do not extend beyond regurgitation; that they believe fair pay agreements are necessary to prevent industry players competing against one another by slashing wages in a race to the bottom. This is a rhetorical fantasy that might generate a grumble and applause at a union meeting but it does not survive even a glance at the facts.

 

‘Slashing’ wages is such an ominously slow and difficult process that, even in the employment contracts which permit it, would be a desperate last gasp of a business teetering into bankruptcy. It is not the cavalier routine process this rhetoric implies. Evidently, these are the debate tactics of those with careers requiring no real-world business experience or keeping those with no ambition beyond clocking out in a job. 

 

In a perverse sense of fortune, due to the stratospheric increases in minimum wage under the Labour-led government, it is possible to observe the opposite of slashing wages to test the hypothesis of competitive business behaviour. Let’s take the supermarket industry. Not just because I’ve got the firsthand experience that comes with working in the industry for two decades, but due to being a provider of goods,the statistical impact of government policy is easier to measure.

 

The minimum wage increase in April 2019, 7.2% up to  $17.70 an hour, is the largest single increase in NZ history. Three months later, the food price index has moved up by 0.9% on July 2018. However, let’s dissect that further:

  • Fruit and vegetables are down 9.3%
  • Meat, poultry and fish are up 5.4%
  • Grocery is up 2.1%
  • Non-alcoholic beverages down 1.1%
  • Restaurant and takeaway foods are up 3%

 

At the risk of making this article TL;DR, (I promise it is worthwhile) look to the latest FPI from September 2019. Food prices compared to last year are 2.2% up

  • Fruit and vegetables down 1.0%
  • Meat, fish and poultry up 5.3%
  • Grocery up 1.6%
  • Non-alcoholic beverages up 1.9%
  • Restaurant and takeaway foods up 3.3%

 

Keep in mind these prices are compared to the same time last year, not the previous month. It is clear that not only is the supermarket industry incredibly competitive, there is zero evidence of wage manipulation being used as a competitive tool. While click-baiting media and panic-inducing politicians label NZ’s food market as being a duopoly, 15% of sales are not from the two major players. In August, Countdown revealed volume of comparable transactional sales had increased 0.3 to 3.2% over the previous quarters while price contracted in every quarter by 0.3-1.8%.

 

Supermarkets are experiencing price deflation in a highly competitive market with high artificial wage increases, not the spiralling slashing of wages in a competition to the bottom. The figures do not match the rhetoric, yet the unions and the government indebted to them are still rushing to return to the path of unproductive, work to rule, labour market stagnation not seen in this country for 35 years.

 

What isn’t being mentioned by the government, unions or media are the side-effects of this rapid minimum wage growth on collective agreement negotiations. Normally we would refer to these as “unintended consequences” but I can comfortably assert these consequences were intended. 

 

Despite three unions donating $260,000 of their member’s money to the Labour party in 2017, leading to the rapid minimum wage growth demanded, no union is ever going to say to their members, “The minimum wage is up, job done, back to work.” The game remains the same, only the name has changed. Now there are many more employees in entry-level positions on the minimum wage than before and that must change; it is time businesses paid a ‘living wage!’

 

MBIE (Ministry of Business, Innovation and Employment) released their discussion paper on Designing a Fair Pay Agreements System on Friday the 18th of October. I won’t attempt to cover the entire discussion document in this article. 

 

What I have covered thus far is the most recent example of an entire industry afflicted with the type of employment agreements the FPA working group envisions for others. The aged-care sector is dangerously burdened by the increased costs inflicted upon it following a successful court case launched under the Equal Pay Act. 

 

Staff numbers have barely moved since the passing of the pay equity settlement, despite  leading to pay rises between 15 and 50%. Turnover rates for Registered Nurses are 38% and caregivers 27%. One in ten positions available nationwide are currently vacant; this is only getting worse since the NZ Nurses Organisation were successful in obtaining large increases late 2018; levels being higher than registered nurses in the aged care sector. Resident numbers are up 1.7%, beds available have dropped by 0.5% and 2018 audits found a third of providers had shortfalls related to resident care and 10% in wound care.

 

The current MBIE discussion contains sections which allow for sector wide collective agreement negotiations, if 1000 or 10% of workers in a sector demand it. In the case of a nationwide supermarket pay agreement, we don’t know whether it may be broken down into supermarket staff (1.7% of 60,000 employers) or the entire retail sector (0.5% of 200,000 employees).

 

What we do know is that unions would be required to represent non-union member interests by ‘acting in good faith.’ As someone who has never been a union member, ‘good faith’ sounds like getting stabbed in the from instead of the back. This legislation still has a long road ahead, but I would bet my union pay rise, that attempts will be made to inflict bargaining fees on non-members.

 

That would see New Zealanders return to pseudo-compulsory unionism, which must be fought with every step. Current union density is 17% (public sector monopolies 60%, the private sector 10%. 

 

I’ll conclude by paraphrasing Margaret Thatcher.
When people are free to choose, they choose freedom. When workers are free to choose, they reject unions. When socialist governments choose, your choice is made for you.

 

(Disclaimer: Stephen Berry works for Countdown supermarkets. He has no authority to publicly represent Countdown and all the information included in this article is obtained from sources published publicly. Any views expressed are the authors own.)

Since the cultural polarisation concocted within university humanities departments spilled out into day to day society, use of the term ‘trigger’ or ‘triggering’ was usually a mockery of hyper-sensitive social justice activists. The context is one of actions previously given no thought at all, such as how one sits when using public transport, now deemed micro-aggressions. Another example could be to show your appreciation by clapping, which some neo-Marxists have replaced with ‘jazz hands’, and the subsequent offense would be deemed‘triggering.’

 

If the government’s regressive employment agreement legislation is successfully implemented, triggering will cease to be a fun internet meme. Rather it will herald the start of an entirely different way to negotiate your employment agreement, involving more people and organisations, irrelevant of your desire to participate. It may even be done without you entirely; aside from your signature at the end. A Fair Pay Agreement (FPA) process is fresh to anyone born after me. Most of everyone else will feel the backward step, returning to the days of powerful unions, nationwide conditions with industrial scraps the new normal.

 

The Fair Pay Working group made recommendations to the Government in December 2018 remaining dormant much of this year, no doubt reprioritised by multiple clean-up operations.The industrial Sitzkrieg is coming to an end, with MBIE issuing a discussion document on Designing a Fair Pay Agreements system for submission until November 27.

 

FPA agreements may become a five step process

  • Initiation
  • Determining Coverage
  • Bargaining
  • Resolving Disputes
  • Concluding

 

There is also the potential to segue on a parallel review processing ensuring no anti-competitive behaviour such as turning a particular FPA into a means to cut wages and conditions. Currently that behaviour is virtually non-existent anyway; New Zealand’s minimum wage is the fourth highest globally, yet food retail is experiencing deflationary price pressures.

 

To paraphrase Winston Churchill, “it has been said that democracy is the worst form of government except for all those other forms that have been tried.” The workplace is a forum where employers and employees interdependently grow financially. The workplace isn’t a democracy, though FPAs threaten to alter that despite decades of sluggish productivity growth.

 

Included in the recommendations currently available for consultation is the question of whether FPAs should apply to industrial sectors, occupations, particular regions or the limits of your imagination. The potential for litigious nationwide chaos may take multiple forms. Let’s use a fairly common job title that exists in multiple sectors such as receptionists. The internet is yet to replace the need for bricks and mortar avenues for logistics, warehousing, retail, administration and call-centres and it is rare that any will have ceased paying a real human being at the entrance for visitors. Currently 22,000 earn their paycheck as a receptionist and should they trigger an occupational FPA, the potential exists for each of them to be covered by the same collective agreement whomever employs them. That scenario alone promises an unjustifiable complexity as the system begins to work. 

 

As more FPAs take shape; whether they be regional, sectoral or industrial in nature, what would this mean for the receptionists already working under the conditions of their occupational agreement, signed with dozens of employers? Does triggering a cleaning industry FPA void the conditions won by receptionists in cleaning company buildings? Is a choice offered to receptionists who may want to swap to the cleaning industry agreement? Does this turn the predictable contract negotiation period into an environment of unpredictable fluidity and given some individuals will arbitrarily exercise choices off-limits to others, what is the actual point of wide-scale collective agreements?

 

Two possible means of triggering an FPA process have been suggested by MBIE, though a union lawyer making six figures could invent reasons to campaign for law changes creating others, I’m sure. The consultative document available ask submitters to describe the merits and drawbacks of triggers based on public interest or representation.

 

Triggering FPAs via the representation test requires a number of proportion of workers in an occupation or industry proving there is sufficient demand for this employment agreement equal to or higher than the minimum required. Suggestions include 1000 people or 10% of relevant workers or potentially both based on the size of the sector. Whichever way you look at it, more than 90% of their colleagues may be relegated to spectators under this scenario. In the case of receptionists, 1000 applications represents 95.4% of workers having no say in starting this negotiation. A 10% threshold is hardly better.

 

Industrial chaos spawned by the actions of a tiny minority (less than those currently belonging to a union) isn’t my only concern. The nuts and bolts are even more important if that amount of power can be wielded by a fraction of participants.

Despite my personal aversion to trade unions, I once found myself sitting in a union meeting for new employees, most of whom were of high school age. I had accidentally wandered in and representative naively invited me to stay as she explained what the union offers members. At the conclusion she produced several chocolate fish from her bag, a prize for those in the room who handed back their membership applications fastest.

We cannot risk job stability being disrupted by small-time bribery of children so the best way to protect individual workers is the construction of indecipherable traps of red tape administered by additional public servants employed to personally manage each minute detail, every step of the way. If representation is the trigger written into law I demand multiple IDs visually inspected and cross-inspected by two case workers for each application. Interviews of those signing to support negotiations verifying 100% of participants understand their actions. Then a meeting of all applicants at a two-day talk-fest in which every signatory has exercised their right to speak, hear objections, respond, compromise and compose a 2000 word publication on feelings and kindness in the form of haiku.

 

The discussion paper also asks whether employers should possess the ability to trigger FPA via representation test. Can you imagine the bloodbath if that was written into the law using the same process as employees? We very well may see the first one-term government of a living Prime Minister since the Second Labour government’s tax increase on cigs and booze cost them the 1960 election. 

 

The alternative test is one of public interests. I can’t fathom the concept of public interest. Individuals are incredibly diverse which guarantees most will have personal interests others don’t share. I’m yet to comprehend how that changes when these very different individuals are all forced into one large group called the public. Fortunately the Ministry has provided examples of how they define the public interest and how that may justify triggering an FPA under the ‘Public Interest Test’.

 

Potentially problematic worker outcomes in the sector

 

Wages are not matching the value of worker productivity: although there has been increased output quantity or quality, it is not due to investment by employers (in technology, training, real estate etc).

 

Value is determined by the agreement of consenting parties, not a delegated committee. The rapid increases to minimum wage levels by this Government, resulting in the farcical living wage becoming the default minimum risk the reverse conditions wiping out some employers.

Considering politicians have few clues how to lift productivity, they have no business setting the criteria by which others should achieve it.

 

Workers experience poor returns on qualifications and training or uncompensated skill development over the duration of their employment

 

What is uncompensated skill development? If you acquire new knowledge and skills while being paid, you have greater value in that sector. If your employer doesn’t recognise it, find a competitor who does. Having dropped out of high school and never attended university, qualifications appear over-rated to me. All qualifications aren’t the same, of course. STEM field Master’s are obviously superior to a Bachelor of Arts majoring in Gender Studies. Many industries provide the opportunity to employees to obtain qualifications paid for by the employer but when everyone has a National Certificate in Retail it holds as much worth $10 billion marks in the Weimar Republic.

 

Either way, I’m unconvinced making everyone in that industry be paid according to the same pay scale is an improvement on competing with your colleagues to achieve better results and getting promoted.

 

There is un‐ or under‐compensated risk transfer from employers to employees (e.g. insecure shifts, insufficient equipment) OR there is a high incidence of insecure (casual, seasonal, labour hire and fixed‐term) employment agreements  OR there is a high incidence of non‐standard, irregular or uncertain working hours, and limited worker flexibility or voice in these areas

 

Looks like orchards will be one of the first employers dragged into FPAs. They’re already desperately understaffed and dependant on sluggish Ministers to authorise overseas recruitment which never arrives in time to prevent significant crop loss. How is implementing unsustainable pay levels nationwide which still won’t encourage New Zealanders going to help? This looks like a plan to bankrupt growers sending all their liquidity overseas in the form of migrant wages as liquidators clear the rotten fruit.

 

There are high rates of exploitation and non‐compliance with minimum standards in the occupation or sector  There is a high incidence of health and safety violations or reports of job strain (stress, fatigue, depression) amongst workers, indicating distinct deficits in the quality of work environments in the sector

 

There is already tough health and safety legislation to address these issues and it does get used when employers fail to comply. Next…

 

There is generally an insufficient provision of training for workers to adequately perform required tasks, particularly where the health and safety of workers or the public is at stake

 

If you don’t train staff properly it hurts your business and you close. If it results in unsafe working environments, that’s already been covered.

 

Evidence of low coordination, or barriers to successful coordination, at a sectoral level such as low collective agreement coverage

 

When compulsory union membership came to an end, membership numbers dived. They’re only higher in the public sector monopolies where tax money pays the wages. Membership is low because they benefit the unco-operative and the lazy. If you’re smart, motivated, flexible and hard working the rewards are greater than a union can offer . Of course some occupations will never pay well; you’re responsible for improving and getting a better job. Paying the bills working two cleaning jobs is tough, so spend your working life finding something better. Getting a better job is also tough but pricing your workmates into unemployment won’t make that better.

This is just a peek at what Labour’s plans to suffocate innovation, decimate dreams and mandate misery. This week’s article only covered the beginning of the decay, next week I’ll detail who leaps, how far and what direction.