Sunday, 12 August 2018

The Government v. The Business Community: Playing Chicken Over Employment Law Reform

But Has Grant Got His Leather Jacket Caught In The Handle? Declining business confidence and how the government should respond to it is fast developing into a game of political and economic ‘chicken’. Both sides know they are being challenged. They also know that the longer they delay responding the greater the risk of a tragic outcome. (Screen shot from Rebel Without A Cause) 

EVERY TIME the Prime Minister and the Minister of Finance address the “Business Community” I wince. It’s painful to watch them abase themselves in the way they do. As if their endless protestations of good will and their oft-repeated promise to “listen” will make the slightest difference. The Business Community is acutely aware that there is nothing with more potential to cause them harm than a left-wing government. If it cannot be tamed, then it must be broken.

At the moment the attention of the government’s business opponents is focused on its reaction to the evidence of plummeting business confidence. This is fast developing into a game of political and economic ‘chicken’. Both sides know they are being challenged. They also know that the longer they delay responding the greater the risk of a tragic outcome. The Business Community is, however, convinced that, on the basis of its previous experience with left-wing governments, Jacinda Ardern and Grant Robertson will swerve first.

By “swerving” they mean backing away (if not actually backing down) from their proposed employment law reforms. The more intelligent members of the business community are only too aware of the head of steam that is building up in the workforce for a decisive shift in the power relationships prevailing in the workplace. Any reform that makes it easier for workers in the private sector to be organised into unions – let alone aggregated into the occupational collectivities of the pre-Employment Contracts Act era – has the potential to set off a wave of unionisation that could fundamentally disadvantage shareholders of all sizes.

Such a “revolution of rising expectations” has, however, been on the cards from the moment Jacinda began scattering her stardust hither and yon in the run-up to last year’s election. That stardust poses a huge problem for Labour. Without it, there was – and is – no possibility of the party winning anything like enough support to form a government. In deploying her politics of hope and kindness, however, Jacinda has raised New Zealanders hopes and dreams to dangerous new heights.

New Zealanders are expecting the Labour-led government to usher-in real and positive changes in the way they live their lives. Failure to meet these expectations will, almost certainly, result in the fall of the Labour-NZF-Green Government.

Jacinda and her team know this. They may have bought themselves some time by setting up scores of working-groups and inquiries, but at some point before the 2020 general election they are going to have to start delivering real gains to the people who voted for them. Being seen to back away, albeit under fierce business pressure, from restoring a modicum of fairness to the workplace will be seen by many traditional Labour supporters (especially the present and former members of trade unions) as a betrayal.

And yet, as the wage campaigns of public sector workers (the only groups who have been able to retain a credible measure of union density) are rolled out and resolved in settlements involving double-figures, the restiveness of the largely un-unionised private sector workforce can only grow. The Business Community do not need to have the consequences of this restiveness spelled out for them. Employment law reform could quite easily result in an unprecedented and largely unorganised strike-wave sweeping across the country.

That’s enough to shake the confidence of even the most unflappable CEO.

Unfortunately, it is also more than enough to unsettle the nerves of a social-democratic government that would (to paraphrase the shrewd observation of an old trade unionist pal of mine) retain control of the losing side in an argument about employment law reform than lose control of the winning side.

In spite of its name, the last thing Labour wants is the New Zealand working-class taking matters into its own hands.

Those who have put their money on Jacinda and Grant swerving at the last minute have, if history is any guide, made a pretty safe bet.

This essay was originally posted on The Daily Blog of Friday, 10 August 2018.


Guerilla Surgeon said...

I think I'd put money on it. Particularly after watching Michael Cullen more years ago than I care to remember.

Kat said...

As long as Jacinda and the baby are not in the car I hope they smash head on. The govt is driving a Vanguard six, the business community a Morris minor.

BlisteringAttack said...

It often staggers me why the media fall at the doorstep of bank 'economists' (who are nothing more than cheerleaders or prophets of doom) rather than going to top economists in top ranked New Zealand universities ie either Otago or Auckland.

Surely, when it comes to the economy, we should be asking for the views of major intellectuals in universities not kids playing silly games in banks.


greywarbler said...

Balance - lessons in log rolling might be needed. Perhaps from Canada, they have got the trees there and recently in trying to behave in principled fashion found strong resistance. Perhaps talking with the leaders of another country trying to make its way would help get perspective.