Dialogue: Unions have vital role in economic reconstruction

MAXINE GAY* says it is time that trade unions were involved in industry and employment strategies, as is commonly the case overseas.

Business and economic development is too important to be left to the capitalists. This philosophy underpins the approach of the Trade Union Federation on the issues of regional, economic and industry development.

Since 1984, this country has suffered under the 19th century free-market ideology, an ideology which saw the owners and managers of capital given free rein to make investment decisions. State, social or cooperative investment were all frowned upon. There was only one form of economically correct investment, that of private investment. And private investment was given only one economically correct goal, that of maximising profit.

Full employment ceased to be a human right (even though New Zealand had signed the International Covenant on Economic Social and Cultural Rights). The creation of jobs became a by-product of capitalist investment rather than an end in itself.

And to ensure that the creation of jobs did not get in the road of profit maximisation, Treasury and the Reserve Bank adopted the non-accelerating inflation rate of unemployment model. This ensured that unemployment stayed at an artificially high level as a contribution to sustaining the economic miracle.

There has been much debate on whether these policies worked. The answer, of course, depends on where you stand. If the goal was to ensure a wholesale transfer of wealth from working people to the owners of capital, the policies were a dramatic success. Former Treasurer Bill Birch acknowledged this with his infamous mid-1990s statement that a growth in inequality between the rich and poor indicated the success of his economic policies, not their failure.

But if the goal was to build a sustainable and balanced economy with full employment and well-paying jobs, the policy was an abject failure. The transfer of wealth from workers to the rich did not go into productive investment but to conspicuous consumption, property and speculative investment.

In the past decade, the Employment Contracts Act took over as the engine for this transfer of wealth.

The effect of these policies on the economy as a whole has been disastrous. Canterbury University economist Paul Dalziel's paper, New Zealand's Economic Reforms Failed to Achieve their Objectives, notes that, compared with Australia, our economy lost $114 billion in output from 1987 to 1998.

For these reasons, the federation welcomes the Government's interventionist regional, economic and industry development programmes. These represent a good start in reconstructing communities devastated by the economic policies of the past 15 years and promoting social well-being.

We have already seen the renaming and reorientation of the Ministry of Commerce as the Ministry of Economic Development and the establishment of Industry New Zealand. The two will be crucial in the development of a strong and consistent strategy.

However, for the Government's industry and economic development strategy to be successful, it must involve and have the support of not only business but other sectors such as local government, Maori, communities and trade unions.

The media have dubbed the Government's regional and economic programme as the jobs machine. Given that workers are central to this strategy in the form of job growth, it is vital that unions, as their representatives, have a key role in policy and strategy development, as well as the delivery of these programmes.

Through the Employment Relations Act, unions have again won the right to bargain over workers' wages and conditions. But as employers so often remind us, we must also increase the size of the pie, not just negotiate over how big our piece is. The problem has been that the employers, and often past governments, have tried to exclude worker and union participation in decisions relating to production.

Trade unions in New Zealand have had neither the history nor opportunity of consistent involvement in industry and employment strategies. This is markedly different to the role of unions in economic development in other parts of the world, especially Europe.

For this reason, the Trade Union Federation has proposed a union initiative for industry and employment development called Unions for Jobs. We have taken our proposal to our sister organisation, the Council of Trade Unions, and hope, within a couple of weeks, to present a joint proposal to the Government.

This would see unions support economic and regional development policies which promote job growth through interventionist state policies. It is in the interests of workers to ensure a growth in jobs, so that we move from a buyers' to a sellers' market for labour. Trade unions must ensure the jobs created by regional, economic and industry development policies are permanent and well paid, not casual and marginal.

Trade unions can play a key role in helping these development policies through involvement at a workplace, community, regional, industry sector and national level. However, because they have had little experience in this role, they need Government support to train officials and delegates, to run job initiative programmes and to monitor the employment outcomes of Government expenditure.

Unions for Jobs would have six tasks:

To ensure that unions are motivated, resourced and trained to play an active role in the Government's development and employment strategies.

To help to identify and to train trade union representatives on regional development, industry sector and employment promotion bodies and projects.

To identify appropriate regions, communities, sectors and firms that may require Government support.

To harness the knowledge and ideas of workers, delegates and union officials for job creation initiatives and input into wider regional and economic development decisions.

To help to ensure the outcome of Government initiatives and spending is good and sustainable jobs.

To liaise with Maori, Pacific, women's, unemployed, business, local government and other sector groups active in the Government's strategies.

Union officials and delegates are well placed to identify areas of job growth or barriers to growth in the firms and industrial sectors that they work in, to promote a job growth consciousness in their workplaces and communities and to provide early warning for firms in trouble.

The Government has also shown that it believes economic development is too important to be left to the capitalists. It needs to support workers and their unions to play a key role in this long-awaited economic reconstruction.

* Maxine Gay is president of the Trade Union Federation.

Herald Online feature: The jobs challenge

We invite your responses to a series of questions such as: what key policies would make it easier for unemployed people to move into and generate jobs?