NZ employers enjoy 'deregulated' labour market

July 3, 1991

By Ian Powell

The New Zealand National government's Employment Contracts Act, which removed legal recognition from unions, became law on 15 May. From Wellington, IAN POWELL describes how workers are faring in the new situation.

Prior to the Employment Contracts Act, industrial relations were structured on collective bargaining although, through negotiation, there was also the capacity for individual bargaining. The act takes away the right to collective bargaining, allowing employers alone to determine whether negotiations are to be handled collectively or with each individual, isolated worker.

Employers have been able to use this enormous legal power to make the nature of bargaining itself a negotiable matter: they can put a price tag on collective bargaining. If a union wishes to negotiate collectively, employers are well placed under the law to compel them to give up something.

Even before the act passed into law, employers were able to use the threat of it. In the hotel industry, for example, they had some success. They were able to eliminate penalty rates (with no compensation in the base rate) by threatening not to renegotiate the award covering small hotels and taverns.

Employers tried the same tactic for the award covering larger hotels. However, while penalty rates were eliminated, there was a compensatory adjustment to the base rate. The difference was that workers employed in the larger hotels were prepared to resort to strike action if necessary, unlike isolated workers in small hotels.

Awards in the public and health services were also renegotiated just before the introduction of the new act. The unions were able to insert new clauses guaranteeing union recognition and protection for newly employed workers and their services. Health service penalty rates, widespread because of the need for 24-hour care, were protected.

However, the cost for these workers was a zero wage rise. This was the price tag for holding on to existing conditions and including some protection from the more draconian features of the Employment Contracts Act.

Child-care workers

One of the most well-known employers of early childhood workers, Barnardos, was able to use the act to opt out of the award covering early childhood workers employed with voluntary agencies.

Barnardos behaved in a particularly arrogant manner, failing to inform either the Early Childhood Workers Union or its child-care workers of this decision. These workers have signed letters asking their employer to return to the award. However, Barnardos refused, and the battle continues.

This attitude makes a mockery of the claim that the act was designed to provide individual choices for workers. Overwhelmingly, Barnardos child-care workers want award coverage, and yet this is being denied to them by their employer.

Two major retail outlets, Deka and Whitcoulls, circulated to all union members a standard letter of resignation from their union for them to sign.

A fast-food employer in Foxton, a small town about 100 km north of Wellington, forced its 17 workers to accept new individual contracts without award protections and with reduced conditions by threatening to dismiss them.

The Alliance company, which runs a number of woolen mills, recently used the act to refuse to renegotiate the award covering textile workers.

Alliance instead pressured many workers to accept individual contracts with reduced conditions, including a loss of redundancy compensation and cuts to penalty and overtime rates.

The Dairy and Textile Workers Union has lodged a claim with the Employment Court to have these contracts deemed harsh and oppressive, and therefore void.

Drivers fight back

An intensive and bitter conflict has broken out among local government bus drivers in Wellington, who are affected by the dual impact of the act and local government transport deregulation.

The former Labour government deregulated local government transport by compelling city councils to tender out all their work. Councils were required to set up their own transport companies run by boards of directors comprising a mix of city councillors and private sector managers. These new companies then had to compete with private transport firms for existing work.

In Wellington, the tender was awarded to the council's company, Wellington City Transport. Unknown to its drivers, WCT had bid on the basis that it would slash their wages. Once awarded the contract, it attempted to use the Employment Contracts Act to compel the Wellington Tramway Union (representing bus drivers) to accept the elimination of penalty rates and greater use of part-time drivers, who would gradually replace full-time workers.

The WCT threatened to take buses off the road on weekends if the union would not agree to the elimination of penalty rates.

The WCT also threatened to stop deducting union fees and to demand that two union officials return to bus driving (breaching a longstanding practice that elected full-time union officials could have leave without pay from employment as bus drivers).

However, the drivers were not cowed by these threats. The massive campaign against the act led to unprecedented industrial activity and militancy, with over a quarter of a million New Zealanders taking some form of industrial action against the legislation.

Bus drivers were active in this campaign, and their determination and militancy did not end on May 15. Once the employer demands became clear, they marched to the City Council, forcing the company to temporarily suspend the threats.

The WCT and union are back in negotiations. The WCT is claiming that the bus drivers are overpaid because their $28,000 annual wage is allegedly above the "market rate" for bus drivers elsewhere in New Zealand.

However, the WCT has been embarrassed by the revelation that when the new chief executive of WCT was appointed last year, the salary for his position increased from $80,000 to $150,000 plus a car.

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