Peter Conway: Sweeping away remains of contracts law

COMMENT

The Council of Trade Unions has for many years advocated a policy platform that will build a high wage, high skill, quality economy.

We support a range of policies and are involved in initiatives that will lift productivity and growth. Alongside many in business, we support investment in quality infrastructure, technology, and education and skills. We also welcome initiatives in economic development.

Unions see the improvements in minimum employment rights as complementary to the initiatives in growth and innovation. Clearly, some sections of business see them as antagonistic.

Unions accept that we cannot impose high wages. They are most likely to come from a period of sustained growth and improvements in productivity as we claw our way up the value chain. But we do need to ensure that there are fair mechanisms available to negotiate on wages and conditions. And we do need a decent minimum wage so that some basic social standards are set in the labour market.

In the current environment, the key labour market issue is how easy is it to get skilled workers - not how easy is it to sack them, or prevent their getting involved in collective bargaining. Unions are part of the dialogue about economic growth, but we want to make sure (this time) that a fair distribution is part of the equation - rather than rely entirely on business to make sure the benefits trickle down. In the 1990s, the benefits trickled up and flooded out of the country.

It is in this context that the CTU views the Employment Relations Law Reform Bill as a modest improvement to a moderate law. Of course, we know that some business lobby groups reject that analysis. They argue that it is a very significant change to employment law. But the facts do not support this. The last major change to employment law was in 1991 when the award system was abolished and a bias towards individual contracts was imposed.

The submission period for the Employment Contracts Bill was a month less over the December to February period than for this Employment Relations Law Reform Bill. We didn't notice any business groups complaining about the timeframe then.

When the Employment Relations Act came into force in October 2000, it did not signal a return to an award system or forms of "compulsory" unionism. Instead it relied on objectives of promoting collective bargaining, freedom of association, and good faith. These are excellent objectives in line with our international obligations. But the Employment Relations Act does not actually deliver on them.

There are sections of the business community that want a return to the Employment Contracts Act and that is why they oppose this new bill. They prefer an employment relations environment where they can impose a non-negotiable contract on employees. But what the 1990s showed was that this approach was not only bad for workers, but bad for the economy. It led to under-investment in skills, a failure to engage in industry approaches, and relatively low productivity growth.

Since the Employment Relations Act changes we have seen a well-documented improvement in the economy. For businesses, tax data suggests that profit levels are up, and the level of business failure is well down.

But the labour market is still affected by the Employment Contracts Act period. Unions say that, just as there is a long and damaging legacy from the privatisation programme, so there is also a long legacy from the Employment Contracts Act. That, and the need to align the detail of the ERA with its objectives, drives our advocacy for this bill.

There is not space here to comment on all the details. However, one example is the protections for vulnerable workers in a sale or transfer of business. If it is the most economic decision to sell a business, then why shouldn't workers either keep their jobs, or be compensated for their loss? What business appears to be saying is that it wants the flexibility to sell, transfer, contract out and so forth - without factoring in the impact on workers. That is unfair.

Unions are looking for a modern investment approach from employers. The tirade against this bill is simply unreasonable and reveals a preoccupation with wanting the upper hand in any dealings with workers and unions. That approach will not build a healthy, strong and fair economy.

* Peter Conway is an economist for the Council of Trade Unions.