Industrial relations law in New Zealand has become an issue in Australia, with both Victorian and federal Liberal parties intending to introduce similar policies here. PETER BOYLE describes the New Zealand Employment Contracts Act and its effects.
The National government introduced the Employment Contracts Act in December 1990, soon after it was elected. At the same time, it cut social welfare benefits and tightened eligibility, slashing NZ$1635 million off the welfare budget.
Despite large protests by the union movement, the ECA was brought into effect on May 15, 1991. The previous industrial relations system was abolished; industrial awards were to be phased out and replaced by enterprise or individual contracts between workers and employers.
According to Mary Slater, a senior research officer for the NZ Public Service Association who recently spoke to Australian unions, the objectives of the ECA were to promote individual over collective bargaining, decentralise bargaining to the enterprise level and de-unionise workplaces by outlawing closed shops (even those put in place by agreement).
Except in a transitional period, the ECA does not recognise the existence of the present unions. Employees can choose to belong to an organisation, but no employees are to be given or refused jobs, or offered better or worse conditions, because of their membership or non-membership.
Employees and employers can authorise any person, group or organisation to represent them in negotiations for a contract. Lawyers, accountants and other professionals may compete with unions to play this role.
While employers must recognise a bargaining agent authorised by the worker/s, the employer does not have to negotiate or settle a contract with that agent. Furthermore, while authorised bargaining agents may enter a workplace to talk to workers about contract negotiations, they have no right of access to recruit or advise new members, elect shop stewards or hold meetings unless the employer agrees.
Workers may not take industrial action to force employers to be party to collective employment contracts that bind other employers (industry-wide contracts), and bargaining agents can be party to a contract only with the agreement of both employers and employees.
Workers have a right to strike (and employers the right to lock out) only in the period of negotiation of a contract and after the old contract has expired. Otherwise, strikes are banned except for certain health and safety reasons very narrowly defined under the act.
Individual contracts
Any agreement binds only the actual parties; new employees are not covered unless the employer and the new employee agree. This sets up a situation where employers can try to break down a contract by replacing existing workers.
Employer and individual employee are in patently unequal bargaining positions, especially at the point of hiring or firing. In some workplaces, job applicants are presented with individual contracts which they have to sign if they want the job.
Individual contracts are clearly favoured under the ECA. Moreover, at any time a worker covered by a collective contract can opt to move to an individual contract, as long as this is not on the
basis of lesser terms. When a collective contract expires, it either has to be replaced with a new collective contract or the workers revert to individual contracts.
Individual contracts can be used to separate workers from supervisors or crucial technical staff, thus reducing the collective bargaining strength of the work force. Individual contracts for supervisors are said by employers to encourage better management. But one local government chief was offered a $5000 bonus for every 1% reduction he imposes in the council's wage bill.
The ECA sets limited minimum conditions for any contract. These are a minimum wage of NZ$245 (A$174) for a 40-hour week for workers over 20 years of age. There is no minimum wage for those under 20. After six months of work, an employee is entitled to certain leave entitlements — public holidays, three weeks annual leave, and five days paid leave for sickness, bereavement or domestic purposes. All other conditions, including breaks, overtime and penalty payments, have to be negotiated.
Every contract must also contain personal grievance and dispute procedures.
Union numbers down
While it is too early to measure the full effect of the ECA on the union movement, total union membership has continued to decline significantly.
In December 1985 there were 683,006 union members in NZ; in December 1991 there were only 518,080 — a 24% decline in absolute numbers. Union membership has fallen from 66% to 56% of the labour force in the same period. (Union numbers declined steadily even under the previous Labour government.)
The agricultural, food and beverage manufacturing, textile and clothing, paper, printing, non- metallic manufacturing, building and construction, retailing, hospitality and transport industries have suffered most under the ECA. Unions are faring better in electricity and gas production, wholesale trade, communications, finance, public sector and metal manufacturing.
It is still early days: according to the Department of Labour, only 8% of the employed work force is covered by registered employment contracts. This is partly because negotiations are still going on in many areas and partly because only agreements involving more than 20 workers need be listed with the department. Many of the worst cases of wage and condition cutting may remain hidden from official view.
Of this 8% of the employed work force, 88% have had their agreements negotiated by a union. While the unions appear to be keeping up so far, many unions report that their organisers are severely strained by the complex and multiple negotiation processes and have little time for other duties such as recruitment and education of the membership.
Losses
Some 49% of employees covered by new contracts under the act had no pay rise, 5% had pay cuts while 46% had pay rises on their ordinary rates of 1-2%.
There has been a tendency for the hours of work to be lengthened, for penalty rates to be reduced and for overtime to be calculated differently. According to the Department of Labour, in 40% of contracts, overtime rates are calculated not as double time or time and a half but as a flat rate. Overtime is also measured not as time over eight hours worked in a day but on the basis of a 40-hour week. In some of these contracts, there was no reference to overtime.
Since the ECA was implemented, union officials have been busy struggling to negotiate contracts and in some cases struggling for their very existence. The NZ Council of Trade Unions held an affiliates conference on July 28 to consider what kind of industrial relations system to campaign for.
While supporters of the NZ Labour Party argued for a corporatist, tripartite model, there was little support for a return to the Labour Relations Act of the previous Labour government. Compulsory arbitration was also rejected.
According to Mary Slater, the final recommendation that was "substantially endorsed" was to develop an industrial relations policy consistent with the right to organise and bargain collectively.