Dialogue: Unions, bosses can build bridges thanks to act

ROSS WILSON* says the new workplace environment sponsored by the Employment Relations Act provides
an opportunity for smart employers.

Very soon the Employment Relations Act will have been in place for one month. We did not wake up on October 3 to mayhem in the workplace, as some predicted. Rather, workplace life has continued much as before, but with a new spirit of employee optimism about the conduct of workplace relations.

It is true that the Employment Relations Act represents a significant change in employment law. The act promotes collective bargaining, recognises unions and recognises the rights of individual workers. Underlying the act is also a much-enhanced requirement for good faith in all employment relationships.

The act does not signal a return to the past of the award system, exclusive union coverage and compulsory unionism. By international standards it is mainstream and moderate.

The act has arrived at a time when there are significant labour-market pressures. Some workers have not had wage increases for a considerable time. There are skill shortages. Price increases have reduced the value of take-home pay. At the same time Reserve Bank Governor Don Brash has fired a warning shot at unions not to push for catch-up wage increases.

In fact, wages have moved by only 1.6 per cent in the past year. A survey of the salaries of chief executives (Cubiks) found an average increase in their pay packets of 5.4 per cent.

Retailers absorbed cost increases for a while and eventually put up prices. Yet workers, many on low rates of pay, are expected to continue absorbing price increases. This is unrealistic. Consumer price increases are bound to be a factor in upcoming wage negotiations.

But they will not be the only factor. Unions negotiate mainly at an enterprise level. The ability to pay will be a major consideration. Other factors include skill shortages affecting recruitment and retention, productivity improvements, how long since the last reasonable wage increase, non-wage improvements and workloads.

There is no wage round as such. Across the labour market there is a great deal of variability. This more complex message does not make headlines, while the image of the union movement using the act to hike up wages does.

Workers know they will not benefit from a wage-price spiral. But workers want, and need, compensation for price hikes.

In the longer term, this balance needs to be addressed through an increase in real wages. Significant increases in real wages for many workers can only be achieved through innovation, investment in skills, developing new export markets and a more active government role in lifting economic performance.

The Employment Relations Act environment provides the opportunity for smart employers to build productive relationships with unions.

When I meet with employers, I am constantly surprised by the extent to which many believed the hyped misinterpretations of the act. When they realise that good faith works both ways, that unions have to adjust to a new law also, and that the law is similar to that which operates in many other countries which outperform our economy, they see the law for what it is - a fair employment relations law.

We recognise that there are many good employers out there. But we believe that the Employment Contracts Act did tremendous damage to employment relationships, to fairness in the workplace and to the pay and conditions of many ordinary workers.

The brain drain has more to do with the relatively low wages in New Zealand (and student debt), than the spurious reasons suggested by the Business Roundtable.

Employment relations law is only one factor in the labour market. Issues such as skill development, changing work patterns, the impact of new technology and globalising labour exchange all contribute to the challenges we face.

The Council of Trade Unions welcomes the Employment Relations Act as a modern law appropriate to these challenges.

Unions want to help employers and the Government to build a country which provides opportunities for our young people, and make New Zealand an attractive place to live. The Government has moved quickly to restore fairness in social policies: increased superannuation payments, increased minimum wage, reduced rentals for many in state housing, increased health funding and frozen interest payments for students at present studying.

There is much more to be done to address relevant workplace issues such as paid parental leave, health and safety in employment and better arrangements for work-based superannuation.

The Council of Trade Unions will be advocating improvements that we believe most New Zealanders will see as fair and reasonable. At the same time, we will advocate measures that sit comfortably alongside other moves to lift research and development investment, encourage new industries and embrace new technology.

* Ross Wilson is president of the Council of Trade Unions.