Second Thoughts: It speaks well for Jim Bolger that he now recognises, albeit very belatedly, that the Employment Contracts Act, one of the key pillars of the neoliberal order which his government consolidated, has contributed hugely to the growth of inequality in New Zealand .
JIM BOLGER’S IMPLIED CRITICISM of his own government’s assault on organised labour is astonishing. The Employment Contracts Act 1991 ranks as one of the most extreme examples of anti-union legislation in post-war history. Certainly, the equivalent statutes enacted in the USA, the UK, Canada and Australia pale in comparison. From the legislation introduced by Jim Bolger’s close friend and ally, Bill Birch, even the word “union” was excluded.
Nor should it be forgotten that Jim Bolger had “form” in the union-busting business. As Minister of Labour in Rob Muldoon’s government he had, in 1983, been responsible for legislating compulsory unionism out of existence.
It was the catastrophic impact of Bolger’s legislation on union membership numbers that made the Federation of Labour (FoL) so biddable in the first flush of Rogernomics. New Zealand’s trade union leaders were willing to swallow just about anything from the Fourth Labour Government – in return for the restoration of compulsory union membership.
Labour obliged, but Stan Rodger, David Lange’s Minister of Labour, let it be known that this would be the last time that the political wing of the labour movement rode to the rescue of the industrial wing. The union movement, Rodger sternly insisted, must learn to stand on its own feet without the assistance of the unqualified preference clause.
To assist the unions, Rodger introduced the Labour Relations Act. The new legislation, in an attempt to make the typical New Zealand trade union bigger and better, mandated a membership base of 1,000, offered assistance for union amalgamations and encouraged the evolution of industry bargaining. Rodger also made it clear that the Labour Government expected the public and private sector unions to come together in a single peak organisation – the NZ Council of Trade Unions.
Rodger’s reforms sent a clear signal to Bolger and Birch that a future National government’s industrial relations legislation would not automatically be repealed by the next Labour government. They took this as a green light for a root-and-branch reform of the New Zealand labour market. With the assistance of the Business Roundtable, Birch and his advisers began drafting the legislation that would become the Employment Relations Act 1991.
In his interview with RNZ’s Guyon Espiner, Bolger volunteers the observation that the unions have become too weak. On the face of it, this is an extremely odd observation. After all, Bolger was well-aware of what would happen to union density in New Zealand the moment the prop of compulsory membership was removed. The experience of 1983-84 was there for all to see. The abolition of standard, occupation-wide contracts (known then as “awards”) applicable to everyone employed to do the same work, was similarly guaranteed to knock the stuffing out of the union movement. How could Bolger possibly entertain the notion that the Employment Contracts Act would not, in very short order, transform the union lions into lambs?
Possibly because the leadership of the NZCTU had reassured him that the reformed union movement: bigger and better resourced than ever before; was more than capable of weathering his storm.
I have been told by a former trade union leader that the President of the CTU in 1991, Ken Douglas, was convinced that the changes enshrined in the Employment Contracts Act would not cause a precipitate collapse in union density, and that employers would be amenable to the continuation of industry-wide bargaining and agreements. On the basis of Bolger’s recent remarks, it seems likely that Douglas conveyed this confidence to the newly-elected National Government. Certainly, it would explain why the Bolger Government felt able to introduce legislative measures which, in other jurisdictions (like France!) would have been met with massive resistance – up to and including a General Strike.
It is, of course, a matter of history that Ken Douglas and his allies in the public sector unions refused point-blank to support the private sector unions’ call for massive resistance. Not even the outpouring of tens-of-thousands of workers onto the streets in the early months of 1991 and the passing of multiple rank-and-file resolutions in favour of a General Strike, were enough to shake the opposition of Douglas and the public sector union bosses. At a special executive meeting of the CTU on 18 April 1991, a motion calling for a one day General Strike was defeated 190,910 to 250,122.
As things turned out, the grim misgivings of the rank-and-file and the private sector union leaders proved to be correct, and Douglas’s belief that the new, improved union movement could handle anything the Nats threw at it was shown to be entirely unjustified. In just a few years union density (the percentage of the workforce belonging to a trade union) fell by more than half.
The fate of private sector workers over the past quarter-century has been especially hard. Union density in the private sector has fallen from just under 50 percent in 1990 to less than 10 percent in 2017. The cost, in terms of worsening working conditions and stagnant real wages, is plain for all to see.
If they were, in fact, given, any reassurances from Douglas concerning the unions’ long-term resilience have proved to be spectacularly misconceived. Their expression would, however, provide some sort of explanation as to why, twenty-six years on, the former National prime minister expresses surprise that New Zealand’s trade unions have become so weak. At the time, Bolger (who has always struck me as a fundamentally decent person) may have consoled himself that the Employment Contracts Act’s bark would be worse than its bite. It speaks well of the man that he now recognises that the signature legislation of his premiership has contributed hugely to the growth of inequality in New Zealand.
This essay was originally posted on The Daily Blog of Saturday, 22 April 2017.