Jim Eagles: Share the good times or bad old days may return

If you kept your eyes open over the past few weeks, you may have seen something once thought extinct: a countrywide strike in pursuit of a national employment agreement.

More than 2000 metal workers from 220 firms around the country have been stopping work in support of a claim for a 5 per cent increase in the national metals industry agreement.

It is all part of a campaign by the Engineering, Printing and Manufacturing Union to boost union membership, revive national agreements (or awards as they used to be known) and win all its members a 5 per cent pay rise.

Of course, once upon a time such things were commonplace. For most jobs, union membership was compulsory, pay rates were set by a rigid structure of national awards, work practices were set in concrete and countrywide strikes were common.

But for many years national awards have been found only in fossil deposits - such as the education sector - so let me give you a taste of how the system worked.

About 30 years ago I was the co-owner and editor of a community newspaper in the Bay of Islands and ended up as an employer representative for negotiations over the award covering journalists on small local newspapers.

We met under the chairmanship of a Labour Department conciliator who suggested it was pointless even starting talks until the metal trades award was settled, because in those days it set the baseline for all other awards. And even when it was settled there was no sense in us discussing wages until the award for journalists on the two big Auckland papers, the Herald and the Auckland Star, was finalised.

And so it proved. Because our highly protected manufacturers were doing well, and the thriving Auckland economy meant the big newspapers felt generous, my little country newspaper had to follow suit even though the rural economy was struggling.

It was an appalling system. Economic realities simply did not come into it. There was no room for flexibility. It was extremely hard to introduce new processes or improve productivity. And I'm sorry to say that many unions were more interested in preserving their own power than creating jobs.

Of course, all that came crashing down with the arrival of the Employment Contracts Act. Suddenly companies were able to negotiate directly with their own staff and set working conditions and rates of pay to suit their particular circumstances. It's no coincidence that since then New Zealand's economic performance has hugely improved.

So is the EPMU's campaign a scary attempt to turn the clock back? Yes, but ...

Yes, it clearly is an attempt to turn the clock back. National agreements make life much easier for unions because they only need one set of negotiations to set pay rates for hundreds of companies.

But what is easier for union officials is bad for business because it requires one size to fit all. Widget makers may be able to pay 5 per cent extra, but forcing the same increase on floggletoggle manufacturers who are experiencing a cyclical turndown will lead only to cutbacks or closures.

The EPMU says that since its campaign started several employers have offered to pay the 5 per cent while others still maintain they can't afford it. Well, some of them probably can't. So the return of national wage campaigns is a worry.

But ... we also need to look at the reason why this is happening.

Unions were, of course, formed to address the imbalance of bargaining power between an individual worker and a big company.

I would argue that for long periods the balance swung too far the other way and gave unions too much influence which was not always exercised for good. I also believe recent union-friendly changes to industrial law ignore the plight of the small employer who has to negotiate with a large union.

But, that said, the Employment Contracts Act, and even its successor, the Employment Relations Act, has given employers much greater flexibility to run their businesses.

Some have taken the opportunity to improve productivity and grow the economy to the benefit of all of us. But many have used it solely to boost profits at the expense of everyone else.

Company profits are soaring. I've tallied up a score of company results reported in the Business Herald and they averaged profit increases of 29 per cent.

Chief executives have had a modest share of that: their salaries have gone up by an average of 5.2 per cent in the past year.

But average pay rates for rank and file employees have risen just 2.5 per cent, half what the CEOs have got, and less than the cost of living.

True, the Government has loaded costs on to employers, including extra leave, the requirement to pay salaried staff for working on statutory holidays and all sorts of compliance costs, but that hardly justifies an across-the-board pay cut in real terms at a time when profits are so buoyant.

Employees aren't blind. When they can see their incomes being reduced in real terms at a time when the companies they work for are enjoying a bonanza, it's hardly surprising if they feel aggrieved. It's hardly surprising either if they start to find union membership, collective bargaining and national agreements more attractive.

Tim Shadbolt once observed, in one of the many great lines of his hey-day in Auckland, "If you create a dog-eat-dog society you can hardly blame the workers if they get to like the taste of dog."

Companies which refuse to share any of the good times with their employees are creating the conditions for a revival of the Jurassic age in industrial relations. They leave their staff with little option but to turn back to dinosaur tactics which have no place in a modern economy.

The tragedy is that the more the unions regain power, and the more companies lose the flexibility to manage their operations efficiently, the less largesse there will be to share around in the first place. That's a lose-lose situation.