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.