It’s Time To Set The Record Straight On FPAs

As the Government continues to push through the Fair Pay Agreement legislation, BusinessNZ, ahead of its Select Committee appearance today is cautioning New Zealanders to ensure they understand what FPAs really mean.

BusinessNZ CEO Kirk Hope says, "The fact that the International Labour Organisation (ILO) has recently urged the Government to examine the impact of the Fair Pay Agreement Bill, in consultation with social partners, and ensure compliance with Convention 98, is an important message that the Government should heed. Aspects of FPAs that are compulsory would likely breach C98 if passed into law and need to be addressed.

"We will be addressing the meaning of the ILO ruling and some of the other common claims (set out below) made about FPAs at our Select Committee appearance," says Mr Hope.

1. Claim - Fair Pay Agreements are fair.

Fact - FPAs are compulsory national agreements that take control away from workers and their employers to negotiate pay and conditions.

Only 10% of workers or 1000 employees (whichever is smallest) in an industry or occupation can initiate an FPA that will affect 100% of workers and employees in that sector. At that point, employers and employees will be compelled to the bargaining table. If they can’t reach agreement employers and employees can have an FPA forced on them by them by the ERA . If no employer organisation is available to represent employers, unions can take their claim straight to the ERA which could force an FPA onto employers without any bargaining taking place. Once an FPA is in place, workers will have no right to change their basic conditions of employment for at least 3 years, and up to 5 years.

2. Claim - FPAs are necessary to improve wages of the lowest-paid and most vulnerable employees.

Fact - The FPA legislation is not well-targeted toward those it is designed to assist - low-paid New Zealanders.

History shows that increases for workers covered by national-level agreements will be conservative in order to ensure that employers can afford them. Those conservative settlements are then locked in for at least 3 years, and up to 5 years. Some of the most vulnerable workers such as cleaners won’t even be covered by FPAs as they are contractors not employees.

As recommended by officials, we support the development of a limited set of sector-based minimum standards for industries where a clear and significant labour market problem has been identified. These would focus on developing approaches for resolving concerns particular to that industry rather than applying the same rules across the whole country.

3. Claim - FPAs will increase productivity and innovation.

Fact - FPAs will do little or nothing to improve productivity or innovation.

Higher wages come from improved productivity but FPAs won’t do anything to achieve that.

What we do know is that our productivity growth was worse pre-1991 when our labour markets were regulated under the national awards system. FPAs standardise conditions across whole sectors and will make businesses less flexible, less resilient, less productive, and less innovative.

4. Claim - FPAs are common elsewhere and will just catch New Zealand up to the rest of the world.

Fact - Since the 1970s, no OECD country has moved to further centralise collective bargaining.

In fact, in recent years countries such as Italy, France, Germany, and Belgium have moved increasingly rapidly away from the model due to stifled productivity and poor economic outcomes.

Fair Pay Agreements are anything but fair. Say no to FPAs and yes to a smarter way of working by signing our open letter at www.yourworkyourway.co.nz

© Scoop Media