The Labour Party leader owes his position to the votes of affiliated trade unions and it is beginning to show. Andrew Little has announced a policy for industrial law that would represent a considerable step backwards for this country. If Labour becomes the government in September it will reinstate industry awards by a different name. It will call them "fair pay agreements" that will set the minimum pay and conditions in each industry. Little says the policy was inspired by the recent "pay equity" settlement for aged care workers, where the Government brought employers and unions together and in the end the Government made the settlement.
But aged care is a heavily-subsidised industry and the settlement is being financed by the taxpayers. To force all employers in an independent industry to come together and negotiate minimum rates and conditions would take a great deal of competitiveness out of the New Zealand economy. It ought to be enough for a government to lift the minimum wage across the whole economy which Labour proposes to do, initially by 75c to $16.50 an hour, and ultimately, the party hopes, to two thirds of the average wage. That part of the package is good.
Not so good is the promise to pay the "living wage" ($20.20 an hour) in the core public sector. It is not economically healthy for waged workers in the sheltered public sector to be paid a higher rate than comparable labour in the private sector, whose taxes are the source of public sector pay. Not only would it be unfair but it would pull the best workers into the public sector at the expense of productive industries.
Labour believes paying the living wage would set an example that "good employers" would follow. But employers in the trading sectors cannot simply lift wages at will. Their business has to earn its income from voluntary customers. Unless it can lift its productivity, or its customers are willing to pay higher prices, it could not match the rates Labour would pay from taxation.
The most surprising element of Labour's workplace policies is its proposal to provide a "referee service" for workers dismissed within their 90-day trial. Though the party hotly opposed 90-day trials when National introduced them in 2009, Labour now says it will keep them. But a referee service would defeat their purpose.
