Labour job contracts proposal alarms employer spokesmen

By Brian Fallow

WELLINGTON - Tamper with the Employment Contracts Act and we will have 11 per cent unemployment within 18 months, says Employers Federation chief executive Steve Marshall.

His counterpart at the Employers and Manufacturers Association (Northern), Alasdair Thompson, warns of strife on the waterfront, a return to the days of stranded Cook Strait passengers and blown export delivery dates.

Their fears have been raised by Labour's plan to replace the act with an Employment Relations Act.

The new legislation would restore unions to the central role in representation and collective bargaining.

It would also promote and encourage collective bargaining over individual contracts.

National, defending the contracts act, has joined the chorus, running newspaper advertisements saying Labour's new act would "take us back to the bad old days of crippling strikes, costing the nation economic growth and jobs."

When the contracts act came into force in 1991, advocates said it would open up the labour market, bringing employees and employers new freedoms to negotiate directly.

More jobs were predicted and pay and productivity would rise.

How well has the act measured up?

Statistics paint a mixed picture. There are 25,000 more full-time jobs than a year ago, but only 50,000 more full-time jobs than in 1986.

Defenders of the act point to the 200,000 full-time jobs created in the five years after it came into force.

Detractors point out that this growth followed radical economic restructuring and a deep recession. Over the past three years full-time employment has flat-lined, they say.

Some trends are clear, however. Job growth has been concentrated in the service industries. And there has been a pronounced rise in part-time employment.

The household labour force survey also suggests many part-timers are not so through choice. Last year (the most recent published figures), 29 per cent of part-timers said they would prefer to work longer.

Council of Trade Unions economist Peter Harris points to other indicators to argue that the "quality" of employment has deteriorated over the 1990s: the proportion of both full- and part-time workers looking for another job has increased, as has the number of people holding down more than one job.

While the number of part-timers has climbed, the average number of hours worked a week has changed little, implying that full-timers are working longer.

Employed people are more likely to work more than 40 hours a week than less than 40. One in five works 50 hours or more.

Whether this is evidence of a liberating flexibility in the labour market or as showing that the contracts act gave employers the whip hand is probably a matter of ideological opinion.

In any case, if Labour forms the next government it will replace the act with what leader Helen Clark describes as more balanced legislation in line with International Labour Organisation conventions.

"That does not mean, and I repeat does not mean, a return to pre-1991 industrial law."

It means a requirement to bargain in good faith, but no return to compulsory unionism or national occupational awards.

Under the contracts act, multi-employer contracts are permitted but there is no right to strike in support of them.

Labour's replacement would reinstate the right to strike in pursuit of a multi-employer agreement provided most union members within each of the enterprises wanted one.

"After nine years of enterprise focus, it seems unlikely there would be a surge back to broader contracts unless both employer groups and unions considered it desirable," said Helen Clark.

But Mr Marshall sees the provision as allowing a minority to determine the environment in a workplace.

"If you have a staff of 15, six of whom are union members, those six can have a meeting and if four of them agree they want to join with the workers in another plant and have a multi-employer contract, that would be their right," he said.

As soon as one company sat down with another to negotiate common conditions of employment "you remove a major area of competitive ability, and that impacts on employment."

Mr Marshall also objects to a change that would allow someone to be hired on a mutually acceptable individual contract one day and join the union, and thereby a collective contract, the next day.

Unions would be the parties to collective contracts rather than the employees covered. That meant, said Mr Marshall, that if the employer and employee wanted to vary the contract - say because the employee's circumstances had changed - they would need the union's approval.

He also saw a potential for the re-emergence of demarcation disputes in Labour's policy.

Employment lawyer Elizabeth Jeffs, of Simpson Grierson, said Labour's proposal was as sweeping a change as the contracts act.

"A criticism of the Employment Contracts Act is that it is not detailed enough and it has been left to the Employment Court and the Court of Appeal to fill in the gaps or perceived gaps," she said.

Labour had not said whether it would adopt a similar approach - introducing a concept such as good-faith bargaining and leaving it to the courts to interpret what it meant - or detail it in the legislation.

"Someone said when the Employment Contracts Act came in it was Bill Birch's gift to lawyers. I think that this new act will be the same," said Elizabeth Jeffs.

Labour's policy paper says good-faith bargaining, a concept from North American labour law, does not imply a duty to settle a collective contract. But it does include a duty to meet and consider any proposals made by the other party, an obligation to respect the choice of representatives and/or advocates, and an obligation to provide information necessary for the purpose of bargaining.

That last requirement has raised concerns about how it would be reconciled with the information obligations the stock exchange imposes on listed companies.

But that looks like a red herring. Stringent North American stock market regulations can handle good-faith bargaining.

If National wins, the contracts act will still be changed. Prime Minister Jenny Shipley has said National wants to bring in a probationary period for new employees before the right to take a personal grievance action for unfair dismissal kicks in.