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Unions gearing up to oppose 'market tests' on Fair Pay Agreements

Thursday 17th October 2019

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Likely sticking points in the government's slowly emerging plan to implement a new system of wage bargaining through national Fair Pay Agreements are becoming clearer following the release of a public discussion document on the proposals.

Key issues on which political wrangling can be expected include proposals that a 'market test' be carried out after an agreement has been negotiated and before it is put in place, to ensure it does not contain undue economic risks, along with arguments over the boundaries of proposed FPAs' industry or sector coverage and regional variability.

The long-awaited next step in the government's labour law reforms was released by Workplace Relations Minister Iain Lees-Galloway this morning, a day after he gave the Council of Trade Unions' biennial conference in Wellington no assurances on the timing of legislation that would be required before FPAs could be negotiated.

The 56-page discussion document from the Ministry of Business Innovation and Employment shows officials seeking a fine balance between the hopes and fears of both unions and employer groups for a set of reforms the government is concerned will contribute further to the skittish and increasingly pessimistic business mood in recent months.

"The requirement (in FPA negotiations) to specify both occupation and sector, combined with the public interest test and representativeness test, should drive initiators to only include relevant occupations that could benefit from an FPA," the document says, referring to key parameters that would determine whether or not an FPA could be negotiated.

"Occupations with high bargaining power would likely not be included if applicants need to pass a public interest test. This will encourage applicants to choose the most relevant coverage and reduce the risk of overlaps."

The proposals suggest that either 1,000 workers or 10 percent of workers in an identified sector or industry, whichever is the smaller, should be able to trigger an FPA negotiation. In sectors where there is evidence of such ills as worker exploitation or very low wages, a public interest test could be used instead of seeking workers' mandates for an agreement to be negotiated.

Council of Trade Unions president Richard Wagstaff welcomed the discussion document, which seeks public submissions by Nov. 27. Issues on which unions would seek change were in initiation processes, market impact testing, and representation, he said.

A six-point manifesto released by the CTU before its conference strongly recommended against any further steps after a final negotiation position had been reached. The proposal to undertake economic or market impact testing appears to represent such a barrier to an FPA moving to implementation immediately after negotiations have successfully concluded.

"We are pleased to see the confirmation of some of the working group's recommendations - the coverage of contractors, 10 percent of employees in an industry or sector supporting FPAs," said Wagstaff in a statement. "We are also pleased to see further work on the practical application of the working group recommendations in principle like the acceptance of a simple majority of voters in order to ratify."

The CTU is targeting three lightly unionised, poorly paid groups of workers - security guards, supermarket workers, and cleaners - as the first priorities for FPAs as it seeks to prove its primary focus is improving the lot of workers in the lowest-paid parts of the economy.

"We are currently considering options for strengthening protections for contractors and it would make sense to include them in FPAs," the discussion document says. Work on that issue would proceed in parallel with the FPA consultation process, which is expected to produce policy recommendations, which will then be the subject of coalition negotiations and the introduction of draft legislation.

Unions hope that the legislation might be passed before the election, expected in the fourth quarter of next year. Hopes that perhaps one or two FPAs would be negotiated pre-election also appear to be fading. Lees-Galloway would give no guarantees on timing when pressed earlier this week, while Winston Peters, the leader of New Zealand First, Labour's coalition partner in government, said he expected it would take "a matter of months" to tie down policy detail.

The MBIE document also outlines processes for including a government-appointed 'navigator' to FPA talks and discusses at length how to ensure fair coverage of both employees and employers in the bargaining process. At issue is the potential for some workers and their employers not to know that negotiation is occurring, and for some workers and employers to want to choose representation at the bargaining table other than their national representative bodies.

The ability to negotiate regional variations, or even region-specific FPAs, is also discussed, although such negotiations "could significantly increase the number of FPAs and the complexity of managing the system," MBIE says. Data at a regional level may also not be reliable enough to support a public interest test.


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