Govt faces big ERA problem in its own nest

By JAMES GARDINER

New employment law promoting collective bargaining presents a big challenge to the Government that enacted it - more than half of its own employees are on individual employment contracts (IECs).

And the Public Service Association, the 40,000-member union which represents most state employees, is determined to reverse the trend of the past decade with the help of the Employment Relations Act, which took effect three weeks ago.

Although union leaders and politicians talk of moderate wage demands, based on affordability and productivity improvements, it is acknowledged that pay rates for many state employees have fallen behind cost-of-living increases over the past 10 years and, in some cases, private-sector rates.

But big pay rises will not only put pressure on the Government's finances. They will fuel already-rising inflation and force up interest rates.

Of the 29,000 fulltime-equivalent workers in the so-called "core" civil service, 12,180, or 42 per cent, are on individual employment contracts and up to 10,000 more are on individual contracts based on expired collective agreements.

Some departments, such as the Treasury, Ministry of Pacific Island Affairs and the Serious Fraud Office, have no collective employment contracts.

In the decade since the Employment Contracts Act 1991 every staff member has been convinced or compelled to sign an individual contract.

In many other departments a minority of staff are covered by collectives.

The Work and Income Department has 62 per cent of its nearly 5000 staff on individual contracts. For the smaller Ministry of Defence it is 93 per cent, the Maori Development Ministry, 96 per cent and the Health Ministry, 78 per cent.

In some big Government departments, Corrections (with about 3800 staff), Inland Revenue (4500), Courts (1800) and Conservation (1600) collectives have been preserved, with between 58 and 78 per cent of staff on them.

Outside the core public service - in state-sector organisations such as the Specialist Education Services, the crown research institutes Crop and Food and National Institute of Water and Atmospheric Research, civilians employed by the Police, and the Maritime Safety Authority - substantial majorities of the workforce remain on collectives, but for the most part individual contracts have taken over.

About half of the 1900 Defence Force civilians (military personnel do not have wage bargaining) are on IECs, as are all employees of the Early Childhood Development Unit, the Trade Development Board, the Office of the Ombudsmen and the Legal Services Board.

Outside those agencies and departments are the state-owned enterprises and crown-owned companies. These include electricity generators and the national grid company Transpower, where the PSA, which once numbered 65,000 members, suffered some of its heaviest losses and individual contracts have become the norm.

The evidence of which workers are worse off and where is not readily available.

Neither the State Services Commission nor the PSA was able to produce statistics and Victoria University's industrial relations centre has records of movements in collective contracts only.

That data suggests public-sector pay rates rose 2.3 per cent in the year to June 1995, 1.6 per cent in 1996, 2.6 per cent in 1996 and in 1997, 3.4 per cent in 1999 and 2.9 per cent this year. Comparable private-sector percentages are 2.6, 2.6, 2.7, 2.5, 2.2 and 1.8. But those increases take no account of individual contracts or collectives that expire and are not renegotiated.

A group that stands out is the firefighters. While the "civilian" employees of the Fire Service are about 90 per cent on IECs, the 1400 uniformed firefighters have been on a collective that expired in 1994.

Even before the expiry they had several years of "rolling over" the collective with no pay increase since 1989, says Firefighters Union national secretary Derek Best. He says that if cost-of-living adjustments are taken into account his members are probably 20 per cent worse off than they were a decade ago.

But the union members have maintained conditions such as penal rates and overtime, which other state and private-sector workers have lost. Mr Best says he still hopes to get a new collective but does not see the ERA as any more helpful than the ECA because, although it means the Fire Service now has to bargain with the union, it does nothing to aid successful negotiations. "Arguably, it makes it more difficult."

State Services Minister Trevor Mallard sees it differently. He says the ERA promotes collectivism and public service employers will be "required to work within that environment."

Private-sector employers will be watching for any hint that the Government might be forcing them to live with more powerful unions knocking on the door but not taking the same medicine itself.