Workplace reforms could harm workers and employers

New analysis published today by the NZ Initiative casts doubt over the recommendations from the Government’s ‘Fair Pay Agreements’ working group, says Business Central.

"The NZ Initiative report questions the key underpinnings of the FPA recommendations, and concludes such agreements would put workers’ jobs at risk and stifle innovation in our economy," says Business Central Chief Executive John Milford.

"New Zealand’s labour market is currently strong. Unemployment stands at 4.2 per cent and wages rose 3.4 per cent last year.

"The Government needs to carefully consider the full implications of its working group’s proposals. Poorly thought-through changes could significantly damage this country’s productivity and economic growth, as the NZ Initiative’s research demonstrates.

"Agreements between employers and employees must be fair and voluntary. The key failing of the FPA regime is its return to compulsory and prescriptive arrangements that accompanied widespread industrial strife the last time New Zealand tried this.

"Inflexibility in our labour market would harm workers, the unemployed, consumers, exporters, entrepreneurs and the economy as a whole.

"All this at the very time when increasing global competition, greater use of automation, and future-of-work innovation is making workers demand more flexibility from their bosses, not less.

"There is also concern that the Government’s immigration reforms are focused on introducing FPAs into sectors desperate for people to fill labour shortages.

"The best way forward is for the Government to make agreements voluntary, as proposed by employer representatives. This could mean FPAs operate as "Code of Good Practice" which would be non-binding unless the employer agrees to give it the status of a multi-employer collective agreement.

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