Editorial: BusinessNZ move may not end Fair Pay Agreements but Government has dropped pretense

A key manifesto pledge of the Labour Party in 2017, fair pay agreements aim to standardise and improve terms and conditions across entire industries or occupations. Photo / Mark Mitchell

EDITORIAL:

Michael Wood's response to news that BusinessNZ is refusing a central role in the Government's flagship industrial relations reforms may have revealed the truth about fair pay agreements.

Rather than agreements to create better working conditions, the reforms are about Labour giving structural importance to the union movement and paying it to do so.

On Thursday, Kirk Hope, chief executive of the closest thing New Zealand has to a peak body for business interests, said it would turn down $250,000 a year of taxpayer funding and refuse to be the default party negotiating Fair Pay Agreements.

The agreements, promised by Labour since 2017, are supposed to see business and unions thrash out terms for a given sector or occupation that are above the minimum standards required by law.

Wood, the Workplace Relations Minister, dismissed the move as unsurprising and almost irrelevant.

"The specific part of the system that BusinessNZ have said that they will not engage with is a fairly small aspect of the framework and will not have a major impact," Wood said.

In the "vast majority of cases" the Government expected industries to negotiate for themselves, with BusinessNZ acting only as a backstop for industries that could not negotiate and, in any case, the Employment Relations Authority would ultimately decide where agreement cannot be reached.

The statement arguably contradicts Wood's Cabinet paper which suggested BusinessNZ would hold an utterly central role in the system. The peak bodies in many sectors have, at most, a handful of staff. If BusinessNZ is not going to play a central role, it is unclear who will.

Wood is also hopelessly optimistic to suggest anything at all about the "vast majority" of FPAs.

The agreements were supposed to be in place before the last election. Even though Labour has a majority in Parliament, it is looking increasingly unlikely any will be struck before the next one.

FPAs were never about agreement with business, and the only surprise about BusinessNZ's move is that it took so long.

The agreements allow unions to initiate agreements in areas where they have little membership, forcing businesses to the table for negotiation.

As workplaces become increasingly flexible and the types of jobs on offer become increasingly complex, agreements covering an entire sector or occupation will either mean little or will restrict employment patterns from changing.

What FPAs will do is put unions at centre stage and labour relations and give them $250,000 a year to be resourced not only to argue over conditions, but to search out sectors to act for.

Wood says the ERA will ultimately decide where agreement cannot be reached anyway, which begs the question of why not cut to the chase.

If the Government really sees the issue of being about unacceptable wages and conditions in the workplace, why not address those conditions; or form a body and task it with coming up with standards it believes are necessary?

The answer is that FPAs are more about the union movement than about workers' conditions. At least now Wood has dropped the pretence about the reforms as being about agreement.