AT LAST! The Sixth Labour Government has finally introduced legislation the First Labour Government might recognise. Labour Minister Michael Wood’s “Fair Pay Agreements Bill” is the first real effort since the Labour Relations Act of 1987 to materially strengthen the hand of New Zealand’s beleaguered trade union movement. If the Bill’s intent is not watered-down in the process of making its way through Parliament, and if the Labour Government is re-elected, then trade unionism in this country is likely to expand rapidly.
The reason for this is simple: the Bill not only makes joining a trade union look like a good bet; it makes it look like a safe bet. The idea of laying a solid floor of wages and conditions beneath the feet of workers in industries notorious for engaging in exploitative “races to the bottom”, but keeping the way clear for improving upon these base “FPA rates” in case-by-case collective bargaining, will act as a highly effective recruiting sergeant for the unions.
Something very similar happened when the First Labour Government made membership of a trade union a legal prerequisite for enjoying the fruits of compulsorily arbitrated “awards” – the model for Wood’s FPAs.
Following the legislation’s passage in 1936, vast, hitherto unorganised, swathes of the workforce were swiftly enrolled in a clutch of new trade unions. The largest of these was the Clerical Workers Union which, for the first time, allowed the overwhelmingly female workforce of office clerks to join the ranks of the industrial army. In the years that followed, workers as varied as journalists and law-clerks were enrolled. There was even a Musicians’ Union.
The “Awards” negotiated by these unions were the brainchild of the Labour Party’s predecessor in progressive social reform, the Liberal Government of 1890-1912. Its 1894 innovation, the Industrial Conciliation and Arbitration Act, was hailed across the world for its enlightened approach to labour relations.
The IC&A Act empowered an Arbitration Court, composed of judges representing the employers, the unions, and the state, to issue legally binding sets of minimum wages and conditions, negotiated by the representatives of workers and employers from across entire industries. The Arbitration Court could also issue “General Wage Orders” lifting the incomes of workers across the entire economy.
The problem, of course, was that if an industry remained unorganised, then the Court was unable to “award” its workers and employers wages and conditions minima. Caring and responsible employers soon found their less scrupulous competitors undercutting them on price by requiring their employees to work harder and longer for less.
Such were the tactics that set off the aforementioned “race to the bottom”: a business model predicated on the maximum exploitation of an industry’s workforce. Putting it bluntly: the lower the wages, the higher the profits.
This was the problem the First Labour Government’s introduction of universal union membership was designed to remedy – and it worked.
The National Party’s spokesperson on “Workplace Relations & Safety”, Paul Goldsmith, was quick to respond to Minister Wood’s introduction of the Fair Pay Agreements Bill, promising to oppose it “stridently”. It was, he said: “an ideological overreach, deliberately going to war with employers at a time when we’re facing huge economic challenges”.
One can only admire Mr Goldsmith’s cheek. The political party guilty of “ideological overreach”; the party guilty of “going to war” against its fellow New Zealanders; is not the Labour Party, but the National Party.
The Employment Contracts Act 1991, introduced by Mr Goldsmith’s predecessor, Sir William Birch, stripped New Zealand workers of workplace rights they had enjoyed for nearly a century. It set in motion the relentless shift of corporate surpluses from wage-earners to shareholders that has seen today’s workers earning thousands of dollars less per year than would have been the case had Mr Goldsmith’s “flexible labour market” not destroyed the inherent Kiwi fairness of the system it replaced.
The destruction of the trade union movement is the most important achievement of New Zealand’s Neoliberal Revolution. In 2022, fewer than 10 percent of the private sector workforce is unionised. In dramatic contrast to 1990, today’s typical union member is a tertiary-educated female, working in the public sector, and earning a salary well above the median New Zealand income of $59,000 per year.
Michael Woods Fair Pay Agreements Bill represents a first – and unmistakably Labour – step towards re-empowering all Kiwi workers.
This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 1 April 2022.