The Government’s report back on the misnamed Fair Pay Agreements (FPAs) demonstrates a failure to listen that was also highlighted in the recent Mood of the Boardroom survey, says the EMA.

Head of Advocacy and Strategy, Alan McDonald, says the Mood of the Boardroom survey highlighted these proposed compulsory, centralised, nation-wide wage agreements as policy that was neither wanted nor fit-for-purpose in the modern workplace.

"What has come back from the Select Committee process makes things even worse for employers and employees, the vast majority of whom will have no say in FPAs, if they are introduced," he says.

"As we said in our submission on this Bill, FPAs are a sledgehammer to crack a walnut. We agree with MBIE’s own advice to Government that there may be a case for minimum pay and conditions in a very small number of sectors. Let’s identify those and work with Government and the Unions to address those sectors."

"It is proposed that the Head of MBIE, an unelected public servant, will now decide if an FPA can go ahead and the Employment Relations Authority (ERA) will decide an agreement, in some cases without any reference from employers, and in the absence of a representative body of affected employers."

"Given the authority found in favour of employees in 77% and 74% of cases from the last two years of available data, employers will have little faith in the outcome of any determination from the ERA."

Mr McDonald says there are other major concerns around notification of coverage of the FPAs for employers and employees, the safety of information that must be handed over, and over-reach by employee negotiators who are given free access to the workplace and get to determine what information is given to employees.

"Apparently a notice in six local papers and one national website is enough to inform every employee and employer in the country that if they are in a certain sector, they are covered by a Fair Pay Agreement. If an employer misses that notice they’re liable for prosecution even if they have no idea that part or all of their workforce is covered by the agreement.

"And if an employee is covered by more than one agreement, then, if 25% or more of their job is covered by one agreement, they fall under that agreement. How is that decided?" says Mr McDonald.

"Employers must hand over employee details to the negotiating union, a breach of privacy as almost 90% of private sector employees aren’t union members. Employers must now include information on how to join a union, if the union wants to include that material in information on FPAs, distributed by employers to their employees."

"Low pay is also a factor in deciding to go ahead with an FPA but there is no definition of low pay. Teachers, nurses and firefighters are all claiming they are low paid at the moment and the public would largely agree with them. They are rightly in dispute with their employer, the Government, but by New Zealand standards they are reasonably well paid. Arguably they can make a case to replace their existing collective agreement with an FPA."

"Coincidentally those are all examples of collective agreements locking in lowest common denominator pay increases over longer fixed terms and failing to respond to the market and demand. That’s what FPAs do for three years," Mr McDonald says.

"Meanwhile, the private sector has responded to high inflation and the shortage of people by currently offering average wage increases of 8-9%."

Mr McDonald says the EMA also wants higher wages and salaries for workers but that had to correspond with increased productivity for a business to remain viable, and simply raising wages did not improve productivity.

"FPAs are a return to failed collective, centralised thinking that was having a negative effect on the country’s productivity in the 70s and 80s, and they will reduce flexibility in the workplace at the very time it is most required."

"They are simply not needed. Countries around the world are moving forward to the enterprise system we currently have in New Zealand while we are taking a retrograde step. A one-size-fits-all approach is not fit-for-purpose in a modern, fast-moving, flexible and adaptable workplace," he says.

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