Wednesday 26 October 2011

Labour's Leg-Irons Remain Unbroken

Still In Use: Labour's "Work & Wages" policies represent a very different approach to industrial relations when compared to the National Party's punitive instincts, and yet, even after 20 years of neoliberal restraint, the Labour Party still declines to extend the protection of union membership to all employees, or to repeal any of the oppressive legislative restrictions on the workers' right to strike. One hundred years ago the socialist journalist, Harry Holland, described these legal restraints as "labour's leg-irons". One hundred years later, little has changed.

THE BEST that can be said of Labour’s “Work & Wages” policy is that it has been universally condemned by the nation’s leader-writers. This is an excellent start for any Labour policy – especially those relating to the workplace. Any Labour plan capable of attracting the unstinting praise of “mainstream” political commentators should always be greeted suspiciously by Labour voters.

Those who claim that there is no real difference between the two major parties have clearly never followed the National/Labour debate over wage-bargaining and the role of trade unions. No other issue throws the differences between the Centre-Left and the Centre-Right into such sharp relief. Because every neo-liberal politician and economist knows that laissez-faire capitalism and a strong trade union movement are mutually incompatible. Where one exists, the other falters and dies.

Though Labour oversaw the introduction of “Rogernomics”, it stopped short of abolishing compulsory unionism and New Zealand’s national awards-based system of wage-bargaining. (National awards were industry-wide, occupation-based contracts establishing minimum wages and working conditions).

Labour’s leadership understood that any Labour Party willing to deregulate the labour-market would forever forfeit the right to be called a Labour Party. The likes of Roger Douglas, David Caygill and Richard Prebble may have looked forward to National’s final solution to the union question in New Zealand, but they could not implement it themselves.

Interestingly, the Australian Labor Government of Bob Hawke and Paul Keating, whose time in office lasted from 1983 until 1996, provides an interesting control to the New Zealand experience. Where our union movement was ruthlessly disabled, and our national award system totally destroyed by the National Government’s Employment Contracts Act, Australia’s unions, buttressed by compulsory arbitration and national awards, remained major players in the workplace. The wages and working conditions of Kiwi workers have lagged behind those of their Aussie cousins ever since.

In other words, had New Zealand’s nearly century-old tradition of extending the protection of trade union membership and national award coverage to practically every wage worker in the country endured, not only would Kiwi and Aussie wage-rates be much more closely aligned, but New Zealand businesses would also had to have become much more effective and efficient.

Because what the Employment Contracts Act did, over-and-above making the private-sector trade unions significantly less effective defenders of workers’ living standards, is allow New Zealand capitalists to extract their profits directly from the pay-packets of their own workforce – rather than from the fruits of improved productivity and/or innovation. For what remained of the private-sector unions, wage-bargaining became a dispiriting process of determining how large a chunk of their members’ income would be conceded to the employers this year.

Without the goad of a constantly rising wage-bill, the productivity (and, hence, competitiveness) of New Zealand industry declined, businesses closed, and workers were forced to seek employment in this country’s notoriously low-paid service-sector – where the protection of union membership is even harder to access.

So, how does Labour propose to break this cycle of demoralisation and decline, and restore the living-standards of New Zealand workers?

First, by creating a new “Workplace Commission” – which sounds like a somewhat stunted reincarnation of the old Arbitration Court. Second, by introducing Industry Standards Agreements. Bearing a striking resemblance to the former system of national awards, these new workplace agreements will establish a minimum set of wages and conditions across entire industries.

Sadly, Labour’s “Work & Wages” policy stops short of once again extending the protection of union membership to all workers. Clearly, non-union workers are expected to be so impressed by the Industry Standards Agreements that they instantly do the decent thing and join up.

But will they? As it stands, Labour’s “Work & Wages” policy is a free-rider’s charter. While the boss will be forced to adhere to the decisions of the Workplace Commission (which, unlike the old Arbitration Court, offers no guaranteed seat at the table to the employers) non-union workers will get their “Industry Standard” improvements in wages and conditions at no cost to themselves. Far from guaranteeing an expansion of private-sector union coverage, Labour’s reforms seem designed to keep it small.

And, just like the old system of compulsory arbitration, Labour’s proposed new regime will clamp its intended beneficiaries in legal leg-irons. It will be unlawful for workers to strike over the content of an Industry Standards Agreement.

But, if employers are required to participate in Labour’s new regime, why shouldn’t workers be treated the same? If National was willing to use the full force of the law to smash trade unionism, why is Labour being so half-hearted about devising legal mechanisms to restore it?

Perhaps it’s because the re-creation of a large and democratically organised trade union movement would pose an existential threat to New Zealand’s neo-liberal establishment. And for Labour – as for the nation’s leader-writers – that remains a bridge too far.

This essay was originally published in The Press of Tuesday, 25 October 2011.


Darien Fenton said...

I think we got the policy about right for these times and you should be congratulating Labour for moving forward on improving wages. We are dealing with the reality of today's labour market sadly, and it's very different to the times you refer to. The policy is about wages and how we improve them. Union membership is addressed in other parts of our policy, which you perhaps haven't read.

Chris Trotter said...

These times? Darien. These times? What, you mean these times when less than 1 private-sector worker in 10 enjoys the protection of union membership? When real wages are falling and the rising cost of living is putting basic necessities beyond the reach of working families? When managerial prerogatives have never been stronger? Are we talking about these times, Darien? Are you telling me Labour's policy is "about right" for these times? Good God, woman, don't insult our intelligence!

Robert Winter said...

"Clearly, non-union workers are expected to be so impressed by the Industry Standards Agreements that they instantly do the decent thing and join up."

Isn't that the best way? Forced membership of anything rarely works. State-created unions are open to leadership manipulation and internal apathy - and we know this from our own NZ experience. The unions that are owned by their members are also more effective political forces. On this, we have to go forward, not back.

philoff said...

Gee Chris, be thankful that the daring and innovative Labour Party have come down from their Third Way perch to look your socialism in the eye unblinkingly...

Don't you think compulsory unionism ulitmately destroyed the union movement and made it reliant on the largess of the state? That lack of space between the state and civil society is, IMO, exactly what allowed the Rogernomic reforms to proceed like a hot knife through butter.

For most kiwis, being forced into a union would be like being forced to go to church.

Brendan McNeill said...

"what the Employment Contracts Act did, ... is allow New Zealand capitalists to extract their profits directly from the pay-packets of their own workforce – rather than from the fruits of improved productivity and/or innovation. "

Chris this kind of comment can only come from someone who has never started a business, created employment, and served customers.

Competition forces all businesses to be focused on productivity and innovation. Only the fittest survive.

Competition also ensures that 'obscene' profits are not available to business owners.

Many Kiwi business owners have simply purchased themselves a job. Their businesses are marginal at best, and they live from hand to mouth.

Forcing employers to pay more for their employees (by increasing the minimum wage - a Labour policy) will only ensure that the least skilled will get dumped from employment, and rot on a benefit, or alternatively, you (and they) will be paying more for every coffee, item of clothing, or product that is made or distributed and sold in this country.

Since socialists are so in love with compulsion, perhaps we should insist that all Unionists, and Politicians should have first demonstrated their ability to run a small business successfully, in order to qualify for office.

This simple 'reality check' would transform labour relations and pubic policy in this country.

Chris Trotter said...

Really Brendan. Sometimes I wonder if you're really what you claim to be. Because if you really are a business-owner, and you were faced with the opportunity to cut back on your wages bill (a major, if not THE major, cost for a small business-person) are you seriously asking us to believe that you wouldn't take it?

And that is what the ECA offered all the bosses in NZ. The chance to put an end to penal rates and allowances, the chance to offer the very minimum in pay rises. In other words, the chance to lift their own share of the business's earnings by reducing the percentage of their outgoings apportioned to paying staff.

They didn't have to be clever, or innovative, or daring; they just had to be willing to use the law to enrich themselves.

Something which bosses have been doing for centuries.

Stevey said...

Labour dumped on the workers of this country when it embraced the neo-liberal economic model in it's "pure" form. The men and women who actually create the wealth were placed well down the food chain below the suits (who, in this country usually only clip the ticket without adding value.) Since then as the economy has opened up further to the forces of globalised capital, the situation has steadily worsened.

Here's a thought. How about the Labour Party saying "look, this economic model is not working for most people, it's taken a while but we realise we made a big mistake and we are SORRY."

How about the Labour Party saying "we pledge to rebuild ourselves as a party of the working class, a bulwark against the rapaciousness of globalised capital and its quisling representatives in this country."

How about the Labour Party creating the future instead of timidly creeping about in "these times"?

I don't know where these people hang out, but it ain't with any of the people I WORK with every day...

Anonymous said...

Ah those dogmatists who claim that there is no real difference between the two major parties.

Maybe the latest Labour announcement will wake them up - their goal post shift to 67.

Nice for all the weary low paid manual workers, especially the Maori men with an average life expectancy of 70.

What will the CTU say about this?

Never mind, now its surely clear to all that there is a difference. One older workers vote coming your way John.

Robert Winter said...

And, from a business perspective, the ECA's "advantages" in terms of lower wages and poorer conditions, may have been advantageous for owners short-term, but have done nothing for our economic performance long-term. It will, one day, in future economic histories of NZ, be seen as a catastrophic move by Mr Bolger and Mr Birch.

Tim said...

"For most kiwis, being forced into a union would be like being forced to go to church."

This rings true for me. Also I don't think I'd really enjoy being in a union. I had 5 years at Massey to try and enjoy that compulsion. It mostly made me bitter about the student politicians.

Unless the union way of life is much better than the free rider way, I will never join one. To me it seems more like a form of legalised protection racket.

In 2005 when I was working at a supermarket for $10 an hour, life wasn't very fun. I'm not sure if there were many unionised workers, no one ever mentioned it during my time there. During my time I got a $1 an hour pay rise! Then I found I just went up to where the new people were starting.

Fast forward a few years and I am a salary earner in the IT field. While I would like some guaranteed minimum benefits, I don't like the idea of being dragged down to a common denominator.

In some of your post you talk about wages, at other times you mention all workers. Which are you in favour of? I can see the benefits more for the dime a dozen wage worker where you do the same thing compared to someone in a more specialized field.

Anonymous said...

My God! You really learnt nothing from your Peter Leitch debacle, did you Darien? We should 'congratulate Labour' for what Chris correctly describes as a freeloader's charter?

You stuffed up. You cut'n'pasted the CTU's ideas in wholesale as Labour policy, and didn't bother to do your job and check to see if your policy would address the problem it claimed to. It doesn't.

Answer this Darien - if I'm a union worker at a supermarket say, and my union (NDU) cuts a Workplace Commission deal with all the supermarket bosses to raise our wages to $16 an hour (yeh right), why should my non-union co-worker join the union when they get the same 'supermarkets minimum wage' of $16 an hour as me, without having to be a union member?

Earning that 6 figure pay check, eh Labour MPs...

Mad Marxist.

Stevey said...

Further thoughts on Labour's wages policy.

They are only talking about one part of the equation, what about the Reserve Bank Act and the distorting effect this has on our economy?

Sure they can raise the minimum wage to whatever they like and even sponsor a large increase in union membership which (maybe, just maybe) lead to further increases. But as soon as this flows in to increased purchasing power for ordinary folks, the gnomes at the reserve bank will raise interest rates.

So mortgage rates go up, that little bit of extra cash is immediately sucked out of your pocket and sent straight in to the coffers of the banksters. Get the feeling you are sorta screwed no matter what?

As an increasing number of commentators (and ordinary folks) are realising, the system is set up to shaft you and was deliberately fashioned thus. No amount of tinkering around the edges will change this.

How better can one illustrate this than by referencing a comment made by Bill English a couple of weeks ago. The gist of it was that even as economic growth picks up, the balance of payments situation in NZ will deteriorate. How can this be? Well it appears we have reached some sort of economic tipping point whereby the level of foreign ownership is such that the amount of money leaving the country exceeds the receipts gained from exports. And the better the economy does, the worse this situation gets.

A great position to be in. Any government that talks about raising productivity in this situation is effectively saying to people "you need to work harder so that people overseas can get wealthier". These times indeed....

PS. I sometimes work at Port Nelson as a stevedore loading logs for export (yes raw logs, not processed timber.) Up until about April we were fairly busy, averaging one vessel a week. Now it is about one a month. Our foreman told us that it's beacause orders from China have virtually dried up and no change is likely soon. Does this explain the possum in the headlights look one sees on John Keys face in the odd unguarded moment???

Anonymous said...

"What will the CTU say about this?"

Check out their site.

They ate it all up nicely like good little children.

Brendan McNeill said...


If all you have to offer the market is a pair of hands, then you will always be at the bottom of the employment heap, and have limited scope to trade your skills for higher wages.

Union or no union, your situation will always be dire.

All the ECA did was allow the market to determine the actual value of those jobs, rather than artificially inflate their value, and force everyone to pay more for goods and services from those respective businesses.

I venture that it's highly unlikely that those employers pocketed the resulting difference. Competition would force them to lower their pricing to meet the revised market conditions.

That's what competition in a market economy does.

It ensures that everyone gets rewarded for the value they bring to consumers, both business owner and employee.

The true test of fairness in our economy is this. Are there institutional structures or policies in place, that prevent the son or daughter of an unskilled laborer from aspiring to and achieving education and employment commensurate with their abilities, albeit with handwork and personal sacrifice?

If the answer to that question is 'yes' then we need to unite to dismantle those structures. If the answer is 'no' then we have cause for celebration.

There will always be exceptions, but generally speaking my view is that New Zealand remains a land of opportunity for all, free from institutionalized systems or structures that restrict upward mobility.

The rest, is up to you.

The only way out for you is to up skill,