David Farrar: Work and wages policy is no surprise

Labour Party leader Phil Goff. Photo / Mark Mitchell

It is a rare day when all four major daily newspapers in New Zealand devote their editorials to the same topic. It is an ever rarer day when all four editorials agree with each other on the same topic.

Yesterday though the NZ Herald, the Dominion Post, the Press and the Otago Daily Times all used their editorials to condemn the Works and Wages policy released the previous day by the Labour Party.

It has been labelled a return to the 1970s by many commentators, and Bill English quipped that the policy wasn't Old Labour, but "real old Labour". I've yet to see a single good word said about the policy, except by the unions. An article today reveals that the policy is almost identical to what the Council of Trade Unions asked for earlier this year. Few should be surprised by this.

Every party has some policies which are generally popular, and some which they know are not popular but they push anyway. Labour's Work and Wages policy is likely to become the equivalent of National's partial asset sales policies.

I suspect the only reason the outcry against their policy hasn't been greater, is that few New Zealanders expect Labour will win the election and get to form Government. This latest policy will make their task ever harder. Very few employees (only 9% in the private sector) are union members today, and do not want a union negotiating terms and conditions on their behalf without their sanction.

The most controversial aspects of Labour's policy are their proposed Industry Standard Agreements. It will allow for a union and an employers organisation to agree on some standard minimum pay and conditions. This agreement will be binding on every employee and employer in that industry, even if the employees are not members of a union and the employer is not a member of the employers organisation.

This is open to abuse by both unions and employers. A large cunning employer could push for their pay rates to become the industry minimum, to try and shaft their competitors who are undercutting them. This will push up inflation and prices.

But the policy is worse than this. It is bad enough a union and an employers organisation could determine conditions for an entire industry without so much as a by your leave. But Labour are proposing a new entity called the Workplace Commission which can also determine conditions for an industry, even if there is no agreement between unions and employers.

This Workplace Commission will be appointed by the Labour Government. There is no mention in their policy of having a balance of people from employer and union backgrounds on the Commission. They could appoint no one but career trade unionists to it.

The Workplace Commission will have huge powers. The equivalent established by the Labor Government in Australia can set base rates of pay, overtime rates, rosters, allowances, annual leave, sick leave, when leave is taken, union access rights, superannuation contributions, redundancy provisions and so on. This is not just about setting a minimum pay rate (which a minimum wage law already does). The proposed policy will result in a huge loss of flexibility for individual employers and employees to agree on things themselves.

Unions will also gain powers to enter pretty much any workplace in New Zealand at any time, to not just promote their union, but to go around staff and ask them to indicate support for an Industry Standard Agreement. So no secret ballots will occur in the industry. Union staff will instead visit workplaces and ask for shows of hands which they can report back.

So Labour's policy involves two massive changes from the status quo (which is in fact basically the employment law framework of the Helen Clark Government). The first change is that agreements will go from being largely per employer or workplace, to industry wide. It is a lowest common denominator approach, with no flexibility for individual circumstances.

The second major change, and more radical, is the imposition of a Workplace Commission that can impose a settlement on employers. The current law does not allow any employer or any employee to be forced to agree to terms and conditions, once they have started a job. The entire system is currently based upon gaining an agreement to make any changes. The proposed Workplace Commission will see the Government centrally setting conditions for entire industries, whether employers or employees want them.

If Labour do win the election, and get to implement this policy, then Marty McFly in his DeLorean will feel that he has arrived home!

*David Farrar is a centre-right blogger and affiliated with the National Party. A disclosure statement on his political views can be found here.