Top Half of the OECD Goal Forgotten

4 December 2003

Top Half of the OECD Goal Forgotten About in Employment Law Decisions

"Government changes to the Employment Relations Act (ERA) are not the 'Christmas present for workers' claimed by the Green Party, but a lump of coal in a stocking for those who wish to see New Zealand climb into the top half of the OECD," New Zealand Business Roundtable executive director Roger Kerr said today.

The bill makes numerous changes to the ERA, including its good faith provisions, the protection of terms and conditions upon transfer or sale of a business, personal grievances and collective bargaining.

Mr Kerr said that in 2000 the government backed off some of its plans for the Employment Relations Bill in response to criticisms. It denied it was anti-business and said it wanted to promote growth and listen to business advice. But government-business forums have produced nothing of substance, and there has been no listening or consultations over the bill. Now much the same provisions are back, in the form of Margaret Wilson's Employment Relations Law Reform Bill.

"None of the changes announced today will do anything to help New Zealand reach the top half of the OECD income rankings, which the government says is its top priority objective. They will simply add to the increasingly hostile business environment in New Zealand and work against the interests of workers and the unemployed," said Mr Kerr.

"Given the strength of the economy over the past 10 years, impressive job growth and the country's low unemployment rate, the burden of proof that these changes are needed should rest on those promoting them. Yet there is absolutely no rationale for any of the changes. There is no justification for discriminating in favour of unions and collective bargaining over individual contracts. With low unemployment and many firms desperate for workers, it is ludicrous to talk about unequal bargaining power.

"The reality is that these changes benefit only unions and their officials, not firms and the workforce. Unions now only represent one in five workers; most workers don't belong to them.

"Measures relating to good faith and collective bargaining represent further steps back down the road to the Jurassic days of compulsory unionism, compulsory arbitration and multi-employer agreements that union officials still hanker after. These are the same people who said the sky would fall in and anarchy would break out when the labour market was freed up in the early 1990s. While the proposed changes might not have dramatic short-term effects, they would lead to the further ossification of New Zealand's labour market in the direction of those in Europe. The cumulative effects would hurt New Zealand firms and workers. The government's own projections already show the economy growing at much slower rates in the next decade than it did in the last 10 years.

"Many of the changes simply involve making the application of employment law even more complex and will be a boon for the legal profession.

"Others, such as the transfer of undertakings clause for vulnerable workers, will directly affect firms' ability to compete in the international marketplace. The requirement that a successful tenderer must take over the employees of an unsuccessful contractor defies any logic. Forcing employers to consult unions over individual agreements is just bizarre.

"There has been much talk in the employment context about free-riding. But the reality is that the government has been free-riding on the reforms of the 1980s and early 1990s, which have delivered sustained increases in economic growth and much improved labour market outcomes. But bit by bit the government has been undermining past reforms, with effects that are apparent in the growth projections.

"Business must take the opportunity of this bill and related holidays proposals to demonstrate that the government's claims to be pro-growth are a charade, and to argue for different policy directions", Mr Kerr concluded.

ENDS

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