ERA go to ground

By KEVIN TAYLOR

Tamper with the Employment Contracts Act and New Zealand could have 11 per cent unemployment within 18 months.


That prediction was made by Steve Marshall, chief executive of the now-defunct Employers Federation, before the 1999 election.


At the same time, Alasdair Thompson, chief executive of the Employers and Manufacturers Association northern branch, warned of a return to the bad old days of stranded Cook Strait ferry passengers and missed export deliveries.


Both were wrong - but Thompson says it was the very fact that business raised such a ruckus over Labour's Employment Relations Act in 2000 that employers today see the law as relatively benign.


The passage of the bill created a freeze - now thawed - in relations between the Government and business during the so-called "Winter of Discontent" in 2000.


The former National Government, which introduced the Employment Contracts Act in 1991, joined employers before the 1999 election in claiming that reform of the law would "take us back to the bad old days of crippling strikes, costing the nation economic growth and jobs".


Yet unemployment has fallen steadily and in the June quarter stood at 5.1 per cent - a 14-year low.


The economy continues to charge forward, despite a grim international outlook. Shortages of skilled and unskilled workers continue to plague the country, and there is even talk of the problem constraining output.


Despite all this, National and Act continue to talk up the quarterly strike and lockout figures from Statistics New Zealand.


But the rhetoric about work stoppages skyrocketing is untrue.


Even business, the natural constituency of the two parties, says there is little to be concerned about. In 1996 - half way through the ECA's reign - more person-days of work were lost to strikes and lockouts than occurred last year.


In 1996 69,514 person-days were lost, costing $9.8 million in lost wages.


Last year, the next worst year since 1996, 54,440 person-days of work were lost, costing workers $7.7 million. Halfway through this year, only 9015 person-days have been lost, costing $1.3 million in wages.


Thompson says the work stoppage figures are a little worse than in the ECA era, but compared with the old days of industrial strife they are a "mere drop in the bucket".


He says the ERA, which is two years old this month, has in some respects been an improvement on the old law.


The Employment Relations Authority and mediation service are examples of the law working well.


The service is resolving problems quickly and largely to the satisfaction of both parties. The authority is also working well, and less reliance is being placed on the Employment Court for decisions.


"If anything it was always the court we had issues with," Thompson says.


But business does not see the ERA as entirely benign. In June the Employers and Manufacturers Association central branch released a survey of North Island employers which showed:


* Almost 20 per cent said threats of industrial action had risen under the law.


* More than 30 per cent spent more than five days working on negotiations.


* 35 per cent said collective agreements negotiated did not meet their business requirements.


Also of note, the good faith provisions had not altered the way employers approached negotiations.


But if the ERA has not lived up to its opponents' worst fears, nor has it delivered great benefits to the union movement.


Robyn May, a senior research fellow at Victoria University's Industrial Relations Centre, says the law has failed to achieve its fundamental purpose - the promotion of collective bargaining.


One area under study in Labour's review of the ERA will be the adequacy of the provisions which discourage and prevent collective bargaining being undermined.


May says: "I hope that comes clearly out of the review - that collective bargaining coverage is not really moving and therefore the act is not achieving what it fundamentally sets out to achieve."

There has also been virtually no movement in multi-employer collective agreements.

Union membership has risen only slowly since the law came into force in October 2000. Total union membership now stands at 22 per cent of wage and salary earners, a far cry from membership before the ECA in 1991.

The ECA's impact on union membership and collective bargaining coverage was devastating, May says, with both halving in three years.

Membership is now concentrated in the public sector, where the biggest industrial disputes have occurred.

May, who is president of the Victoria branch of the Association of University Staff, says that is because collective bargaining is more prevalent in the public sector and salaries have been held back so much there is now pressure for catch-up.

"Where unions are going to make it up in the private sectors is through multi-employer bargaining, and certainly unions have found that very difficult. There's not anything in the ERA which really supports that."

That is another area that Labour will look at. The review, conducted by the Labour Department, is due to be finished by the end of March.

It will study whether more administrative support needs to be given to facilitate multi-employer collective bargaining, particularly where the size of employers in particular sectors makes enterprise bargaining inefficient and ineffective.

Council of Trade Unions boss Ross Wilson believes the Clark Government did not go far enough in its first term with the ERA in swinging the pendulum back towards social justice and fairness.

He told the Business Herald recently that one of the CTU's policy aims during Labour's new term is fine-tuning the act so New Zealand fully complies with International Labour Organisation conventions 87 and 98.

These unratified conventions have been argued as allowing for general strikes on economic and social issues, not just employment agreement disputes.

And Wilson wants the Government to protect workers when a business is sold or contracted out. This is also on the review agenda.

Phillipa Muir, a partner with legal firm Simpson Grierson, thinks the ERA still throws up grey areas for employers and lawyers, and little case law has developed.

She says by and large access to justice under the law has been speedy thanks to the mediation service.

"Having said that, there have still been quite a number of grey areas, which has made it difficult, particularly for employers."

One area that needs clarity is the good faith provisions. Labour Minister Margaret Wilson says the review will identify any fine-tuning needed in the act.

She says one area to be looked at - protest or sympathy strikes - will not be made lawful despite the claims of business.

Although she says she has ruled out such a proposal many times, the message does not appear to have got through to employer groups.

Thompson says business is concerned at the prospect of general strikes. However, he doubts many unions would get involved in a general strike today, as most are now much more focused on achieving growth. Unions know the only way to improve the country's wealth and wellbeing is through increased productivity.

* In forum tomorrow Robyn May and Phillipa Muir discuss the law's first two years.