What's eating workers in strike-torn election year

Business NZ chief executive Phil O'Reilly says employers have already paid out bigger money for skills.

The Engineering, Printing and Manufacturing Union invites Solid Energy to look on the bright side of the two-week national coal miners' strike, which ended this week with an alleged cost to the company of $21 million in lost revenue.

New Zealand's biggest coal producer has helped to break a nasty employer habit, suggests New Zealand's biggest union.

Breaking employers of the "habit" of paying consumer price index-linked wage increases of around 3 per cent is a big part of the union's campaign to get its 51,000 members a minimum pay rise of 5 per cent this year, says national secretary Andrew Little.

Coal miners have won a 5 per cent increase this year, plus a 2 per cent cash payment next year - and a national employment agreement.

The union's "5 for 05" campaign is a first, launched on its conviction that company profits, sharemarket strength and a robust national economy entitle workers to at least 5 per cent.

The argument may be questionable, but it is adding fuel to the present rash of industrial action - at least 10 strikes this year so far.

The most publicised have been stoppages by Auckland's Stagecoach bus drivers, the national coal miners' strike, rolling 48-hour strikes by Air New Zealand international flight crews and strikes and protests at universities.

But in the background have been significant others, including stoppages by more than 2000 metal workers from 220 companies in support of a 5 per cent increase in their national industry agreement, at the ANZ and National Banks, by security guards at Middlemore Hospital, and by staff at the Christchurch City Council, the Whakatane District Council and Auckland International Airport.

Metal workers won a 5 per cent rise over 15 months and the bus drivers got their claimed $16 an hour.

Little believes the campaign is a success, citing 5 per cent increases in 90 per cent of Engineering, Printing and Manufacturing Union settlements this year.

He says workers, many of whom have never taken industrial action in their lives, have decided that the employer "ritual" of settling at cost-of-living or rate-of-inflation levels for the past 15 or so years is unacceptable.

Given all the unrest, and the increasing use of "national agreements" and "multi-employer" contracts, it is tempting to assume we are heading back to the bad and bitter old days of national awards and frequent, prolonged stoppages in public-sensitive sectors.

Toss in a severe shortage of skilled workers and an imminent general election and you would be excused for thinking there's trouble at mill.

But employer champion Business New Zealand argues that some actions have unique issues at heart. Chief executive Phil O'Reilly says problems were simmering before EPMU's campaign.

"Some of it, and I don't want to overstate this, is caused by some provisions of the Employment Relations Act.

"In particular, the university [staff] industrial action has been encouraged by the act, because they are striking for a multi-employer collective agreement. They are encouraged to under this act."

O'Reilly suspects there is another element of "ERA-ness" currently at work - communication constraints between employer and staff.

The ERA, written by the Labour Government to replace the previous National Government's Employment Contracts Act, makes unions the primary communication agent with staff during bargaining.

"Certainly employers feel constrained to go and talk to their workers and explain an offer and get feedback on it. I suspect that is prolonging industrial disputes and making them harder."

Little says adopting a national agreement means "you can deal with industry-wide issues on a more sensible basis than enterprise by enterprise".

"Wage disparities are opening up that couldn't be explained by anything other than employers trading one group of workers off against another.

"There is no reason why, if you are an underground miner working in freezing conditions on the West Coast, that you should be paid any less than an underground miner working in freezing conditions in Huntly."

O'Reilly believes we are seeing the return of "professional negotiators" bargaining across a large number of agreements.

"The difficulty here is that the needs of a site, its workers and employers, are given less weight.

"That is not meant as an insult to union officials, but when you move into a more centralised bargaining structure, inevitably you see less of a single-minded concentration on individual sites, and much more standardisation in claims and activity."

O'Reilly says the EPMU strategy of starting bargaining at 5 per cent is "very negative".

"It's like employers saying we'll start negotiating at zero."

But why shouldn't workers get a share of the economic good times and better business performances?

Household costs have been rising. Latest CPI figures show housing prices rose 1.7 per cent in the June quarter, transport costs, driven by petrol rises, were up 2.1 per cent, and household operation costs rose 0.5 per cent, mostly because of electricity charges. Overall, the CPI was 2.8 per cent higher than in the June quarter last year.

And although annual GDP growth may have slowed to 2.5 per cent this year, it was 5.8 per cent around the same time last year.

Victoria University concluded this week that wage rises in the past 12 months were higher than at any time in the past 14 years, but "low" given the health of the economy.

A survey by its industrial relations centre found the average pay rise for all workers in the year to June was 2.8 per cent. The average during the past 14 years was 2.2 per cent.

The Labour Department says average hourly earnings rose by 1.5 per cent in the March quarter, from $20.25 to $20.56. The annual growth in average hourly earnings rose to 3.6 per cent..

And what about the much-bemoaned skills shortage? If employers paid better, wouldn't they keep and attract more skilled staff?

O'Reilly says EPMU's economic arguments are "glib generalisations".

NZX figures show 100,000 more New Zealanders (equal to the population of Tauranga) have invested in the sharemarket since 2000, and public company profits have generally been fatter, but try telling a small export manufacturer in Timaru with a shrinking order book that it's more prosperous.

Little says the EPMU is "sensitive" to businesses struggling with the strong kiwi dollar.

Where an employer has been able to verify this, there have been settlements of under 5 per cent.

But O'Reilly says he has seen no evidence of that.

"What he is really saying is, 'You pay 5 per cent unless you can demonstrate otherwise', instead of saying what would be a sensible outcome for you and your workers."

O'Reilly says Little is also ignoring the fact that labour costs have risen at least 2 per cent already this year for most employers - over and above any bargaining. The Government's Holiday Act has seen to that.

Little says employers are losing skilled staff overseas "because our pay rates simply aren't adequate".

O'Reilly says employers have already paid out bigger money for skills in response to market forces.

"What is also being ignored here is New Zealand's need to improve productivity. One of Andrew's arguments is employers must pay more because Australians are paid more.

"The price of their products would go up and they would become less competitive. That's simply a way of putting companies out of business."

Little says tax cuts would give workers a one-off paltry gain compared with a 5 per cent wage rise, and the trade-off for a worker losing a week's pay to win a 5 per cent pay rise by striking can be worth it.

"They will make that up in the course of the year and the next year they will still have it."

One thing the pair agree on is that the "5 for 05" campaign was not timed for an election year.

But they differ on its likely impact at the polls.

Little says if workers are rewarded they feel good about themselves and that's "positive for the incumbent Government".

O'Reilly says: "Industrial action is traditionally unhelpful to a Labour Government."

For Solid Energy bosses, who saw customer orders worth $1.5 million a day go up in smoke during the most bruising industrial relations encounter they can recall in many years, the point is probably academic.