Employment Contracts Act has hastened decline of national economy

“By encouraging employers to reduce real wages and to substitute cheap flexible labour for improvements in training and productivity, the Employment Contracts Act has played a key role in driving down New Zealand’s long term economic performance over the last decade,” Trade Union Federation President, Maxine Gay, said today in submissions to the parliamentary select committee on the Employment Relations Bill.

“The ECA has sent all the wrong signals to business. It has said, in effect, ‘greedy business is good business’. This has been a major factor in cementing New Zealand’s place in the global cheap labour economy”, Ms Gay said.

Ms Gay cited figures from New Zealand’s national accounts which showed that in the first five years of the ECA the gross profit component of GDP grew at more than twice the rate of wages.

“In those first five years there was a massive 42% increase in ‘operating surpluses’ as opposed to a 19% increase in ‘compensation of employees’.

“Under the ECA, business has been able to increase its share of the value created by workers without having to invest in new technology, training or systems.

“Far from resulting in improved investment in jobs and industry this huge transfer of wealth has simply diverted capital into speculative investment in New Zealand and longer term investment overseas,” Ms Gay said, referring to studies quoted in the Trade Union Federation submisssion on the Bill.

“In short, there is nothing productive about taking away people’s rights and reducing their wages and conditions. If there was, then the massive sacrifice made by New Zealand workers over the last nine years would have yielded some reward.

“In fact, this process is counter-productive and is hastening our slide out of the ranks of developed nations.”
Ms Gay expressed concern that the Employment Relations Bill did not raise employment standards far enough to bring New Zealand into line with international norms.

“The Bill as it stands does not provide enough protection for collective bargaining, collective action or the conclusion of collective agreements. It still falls below ILO standards and the laws of other OECD countries in this respect.

“Relief for our most vulnerable workers will be slow, at best, under this law as it stands at present. Equally, it will do little to discourage a continuing pattern of profit extraction and de-industrialisation which is sapping the national economy of real jobs and investment,” she concluded.

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Contact: Maxine Gay (04 ) 237 5062 or 025 276 9225 or Michael Gilchrist (04) 384 8963

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