Employees and productivity to suffer under compulsory contracts

Employees and employers will have rights and flexibility stripped away from them should the Government adopt the recommendations of its 'Fair Pay Agreements' working group, released today.

"The working group is proposing to implement 'Fair Pay Agreements' that are neither fair nor agreed upon," says Business Central Chief Executive John Milford.

"Handing the ability to set pay and conditions for an entire sector of the economy to just 10 per cent of its employees is untenable in a 21st century democracy.

"Employees value the ability to negotiate directly with the companies employing them so they can arrange for flexibility such as tailored working hours, individual conditions best fitting their family circumstances, and additional training and development.

"Of course, in the event such negotiations do not work out for them, employees already have the ability to unionise, bargain collectively and strike to advance their claims," says Mr Milford.

Currently, only 17 per cent of the entire workforce belongs to a union, a figure that falls to 9 per cent when considering just the private sector workforce.

"Given the importance of employment law, it’s unfortunate the working group is divided and did not undertake further work and compromise to produce unanimous recommendations."

New Zealand's productivity grew just one per cent over the past twelve months, as measured by real GDP per capita growth.

"Minister Lees-Galloway repeatedly cited the need to lift New Zealand's productivity when establishing this working group, but unfortunately their recommendations published today do nothing to advance this worthy goal," says Mr Milford.

"Forcing the same pay and employment conditions on all companies in a sector deprives them of the ability to innovate and outperform their competitors. For example, an employer might seek to introduce rostering flexibility in exchange for higher pay.

"It’s odd that today's recommendation for compulsion goes against the new opt-out provisions contained in multi-employer collective agreements (MECAs) that was legislated for by the Government just one month ago.

"The Prime Minister promised New Zealanders in August last year there would be 'no more than one or two' fair pay agreements in the current electoral term. Given the minimal role for the Government to initiate and approve FPAs in today's recommendations, it’s clear the Government will need to make changes to fulfil this promise.

"The working group's recommendations are bad for workers, bad for employers, and will negatively affect New Zealand's productivity growth. For these reasons we will continue to advocate strongly against these changes being passed into law."

Contact: Brent Webling

Phone: 021 821 383

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