EMA: No positive outcomes from FPA proposal

EMA chief executive Brett O’Riley is concerned that only unions can initiate bargaining for an FPA in the proposal, which does not allow for voluntary negotiation and arbitration, which is currently a breach of international law. Photo YouTube
EMA chief executive Brett O’Riley is concerned that only unions can initiate bargaining for an FPA in the proposal, which does not allow for voluntary negotiation and arbitration, which is currently a breach of international law. Photo YouTube
The EMA says there will be no positive outcomes from the Fair Pay Agreement (FPA) proposal for businesses.
Chief executive Brett O’Riley says the effects of the proposal to Cabinet today on FPAs to standardise conditions across industries or occupations will make them less flexible, less resilient and ultimately less productive.
The EMA is also concerned that only unions can initiate bargaining for an FPA in the proposal, which does not allow for voluntary negotiation and arbitration, which is currently a breach of international law. This has repeatedly been raised with the Government in the lead-up to this announcement.
O’Riley says FPAs are equally disadvantageous to everyone – employers and employees – and will not achieve the highly-skilled, innovative workforce and economy with well-paid jobs that is needed.
“Given there is no evidence that FPAs will increase productivity or reduce inequality – which have in fact both improved since company-level bargaining became permitted in 1991 – where are the benefits and why is the Government looking at this beyond copying what has happened unsuccessfully in Australia?”
“Essentially, this would take us back to the past when we had industrial awards which saw workers’ share of Gross Domestic Product (GDP) decline and more inequality in income than we have now. This is not the way to create a high performing competitive economy,” O’Riley says.
The EMA has no anecdotal evidence from its 7400 member businesses that employers are cutting down their costs to get contracts by paying people less, except where Government procurement has forced this outcome in areas like the provision of bus services.
“Our concern is that FPAs will result in higher wages, and the solution for businesses will be to cut down their workforce, or in the case of already struggling manufacturers and SMEs, they may have to shut up shop,” says O’Riley.
“Those at greatest risk will be the unskilled, unemployed and inexperienced – particularly our young people, because typically they are the cohorts that are impacted the most by margin pressure or downturns, as evidenced during the last 12 months.”

BusinessNZ: Fair Pay Agreements should be terminated

BusinessNZ says significant problems with planned Fair Pay Agreements have not been addressed, and the plan to implement them should be terminated.
The Government today released the details for compulsory, nation-wide pay agreements to be introduced next year, along with financial support for the CTU and BusinessNZ to coordinate them
BusinessNZ chief executive Kirk Hope says employers are not interested in compulsory, nation-wide pay agreements, irrespective of any funding support offered.
He said the plan would take away business’ right to a say over wage-setting and would introduce a dangerous system that would lead to labour disputes and strikes.
“There would be nothing “fair” about Fair Pay Agreements,” Hope said. “Any pay deals reached wouldn’t be fair because the process is essentially compulsory – employers would be required to agree to what unions wanted, with compulsory arbitration if they didn’t.
“This is against international law, which says collective agreements should always be negotiated voluntarily.”
Hope said BusinessNZ had engaged with the Government and unions in good faith in dialogue about the Fair Pay Agreements plan, but the problems raised by BusinessNZ had not been addressed, and business could not support the plan to implement them.

Canterbury Chamber: FPAs have no place in modern workplace

Canterbury Employers’ Chamber of Commerce (The Chamber) chief executive Leeann Watson says there is no place for Fair Pay Agreements (FPAs) in the modern workplace, following today’s announcement detailing the introduction of FPAs and a plan to implement them.
FPAs are single documents that set the terms of employment and conditions of work for all workers in a specific sector, industry or occupation. The Agreements are nation-wide and compulsory, and are set to be introduced next year, along with financial support for the New Zealand Council of Trade Unions and BusinessNZ to coordinate them.
Watson says the introduction of FPAs is “hugely problematic” for the business community.
“The introduction of FPAs really goes against the country’s progressive employment environment, effectively taking away the rights of employers to set their own wages, which will be hugely significant for the business community.
“We are a country of small businesses. FPAs would force payment of higher wages within sectors which could force some newer, smaller firms out of business, reducing competition, productivity and growth. It would also destroy contracting, as it would cover all contractors in a sector.”
Watson says the move does not reflect today’s modern workplace.
“Employee expectations have changed dramatically from when financial remuneration was the only benefit. While small businesses may not be able to compete with big business wages, they can compete in providing an attractive employment package through the ability to engage in meaningful work, flexible work environments and so on.”
Watson says even if there are only one or two FPAs in the first year, the potential impact goes well beyond that.
“With the introduction of FPAs, there could be a wage-price spiral, which we have seen in the past, when compulsory collective bargaining led to wage inflation and higher prices, and FPA settlements impacted other sectors, causing wage relativity pressures and increased prices. There is also the possibility of FPA claims spreading rapidly once enabling legislation is passed.
“Standardising conditions across industries and occupations, makes them less flexible, less resilient and ultimately less productive – which is not what our economy needs and especially not now given many businesses are facing the challenges of a Covid-19 environment as well.
“This really goes against everything we are trying to do for employment in this country, which is to create a progressive, enabling, supportive environment where businesses – and therefore their communities – are able to thrive.”
Watson says plans to introduce and implement FPAs should be ceased.
“While there has been significant engagement between the business community and the Government, this time the key problems raised have not been addressed, so we do not believe FPAs should be progressed at this time.
“We are calling for the Government not to implement any legislation or regulation with respect to FPAs or if it does implement FPAs that they should be voluntary and not compulsory. We look forward to continuing to engage with Government on this issue, including through the BusinessNZ Network.”

NATIONAL: Labour stuck in 1970s with National Awards 2.0

Labour’s so-called Fair Pay Agreements are an ideologically-driven project without any sound analytical basis, National’s Workplace Relations spokesperson Scott Simpson says.

“It is acknowledged in the Cabinet Paper that the FPA could lead directly to businesses having to cut costs by reducing staff numbers and hours or even to them leaving the market – not to mention driving costs up for goods and services.

“I also have serious concerns about the legality of some of the proposed measures as they clearly breach the principle of ‘freedom of association’.

“Minister for Workplace Relations and Safety Michael Wood and the Government must front up and explain this and the other bizarre inclusions in the FPA Cabinet Paper.

“Why, for example, is it necessary for them to legislate that non-union members contact information can be obtained by unions from employers and so long as the primary communication is about the FPA they “would not prevent unions from including other messages in communications”?

“My concerns are echoed by the Treasury in their statement: “the [Regulatory Impact Statement] acknowledges there is minimal empirical evidence for the problem or policy response”.

“Labour’s so-called Fair Pay Agreements may be celebrated by unions who are struggling for survival, but they will not improve things for individual workers.

“This will see 90 per cent of a workforce at the mercy of the other 10 per cent and entire industries bound by agreements whether they participate in the FPA bargaining process or not.

“This Labour Government is growing more interventionist by the day. It has not met a problem it doesn’t think can be solved through more centralisation, regulation, bureaucracy, and more power in the hands of the Government.

“Labour say they want to “drive an enduring, system-wide change,” but history tells us that this enduring change will not be for the better of workers, employers, industry, and the economy.

“This is compulsory wage controls. It is unionism gone universal. The National Party will repeal these recycled National Awards.”

ACT: Far more radical than anything the Government has proposed before

“Compulsory unionism is undemocratic, will be a wrecking ball on the economy, and doesn’t solve any identified problem,” says ACT Leader David Seymour.

“Today’s proposal is far more radical than anything the Government has proposed before. It said it would initially be ‘one or two industries.’ Today’s proposal would allow any industry to have compulsory unionism forced on it by one-in-ten workers from day one.

“You cannot take a relic of the 1970s, dust it off, and make it stick 50 years on. We will wipe it off the statute books sooner or later, and the way this Government is abusing its power, it is starting to look like sooner.

“Have no doubt, the Government is proposing undemocratic compulsory unionism. Today’s proposal is that 10 per cent of workers can start a process that has no off ramp. It would be compulsory for everyone in an occupation or sector. Even if the majority vote against the proposal, twice, it just gets referred to the Employment Relations Authority. The Authority then forces conditions on everyone in the occupation or sector.

“New Zealanders have voted with their membership, 70 per cent to 20 per cent over the past 30 years. Despite that, Michael Wood and Andrew Little won’t listen. They’re bringing back compulsory unionism whether we like it or not.

“When creating public policy, ACT always asks what is the problem we’re trying to fix? In this case there is no problem. It is a union hit on middle New Zealand who’ve said by their actions they want nothing to do with unions.

“The current law allows multi-employer collective agreements. The nurses have one. Labour are not doing anything new here, they are forcing something most workers don’t choose on any workforce where 10 per cent can be signed up to it.

“The current law has a comprehensive range of statutory worker protections. There is a minimum wage, protection for businesses that are sold, non-discrimination laws, and dispute rules. There is simply no problem to solve here.

“The original working group’s claim that wages have fallen as a percentage of economic output has been debunked by the data. The reality is that, since the Employment Contracts Act in 1991, wages as a percentage of GDP have trended upwards, not down. Making rules for more pay is not sustainable without productivity growth, that doesn’t come from complicated union negotiations.

“This is backed up the Ministry of Business Innovation and Employment (MBIE) Cabinet Paper.

“It says: “This policy proposal is significant: Fair Pay Agreements may make substantial structural changes to the economy and if not well implemented, the policy risks wide- spread negative effects on employment…. the RIS acknowledges there is minimal empirical evidence for the problem or policy response.”

“This is classic Labour Party. Pushing ahead with an ideological agenda over what is best New Zealanders, and in this case further squeezing middle New Zealanders.

“If everyone’s wages get raised regardless of effort, we will stop seeing people striving to work harder. Why bother when you’re getting the same amount as someone doing the job to worse standard. Employers will stop taking risks on people who might be less productive.

“I have no doubt that these agreements will lead to workplace bullying. Union thugs are the worst kind of thugs. Fair Pay Agreements only need 10 percent of workers to come into effect and if they’re voted down, they’ll still be imposed. On that membership drive, and on agreement votes, there will be bullying. Why would you introduce a law where one person’s pay and conditions can depend on another person’s vote?

“This is policy-making madness. ACT would repeal this 1970s policy and bring New Zealand back into the 21st Century.”

The most egregious aspects of this new policy are:


  • 10 percent of workers can initiate an FPA process
  • All employers and employees within an industry would be bound by it
  • Once bargaining has been initiated, an FPA must result
  • An FPA can be voted down twice by employers and employees and still be forced on an industry
  • Unions won’t need consent to enter the workplace
  • Requires employers to give employees four hours off work for FPA bargaining

Economic impacts:

  • Risks wide-spread negative effects on employment
  • There is minimal empirical evidence for the problem or the policy
  • FPAs could increase the price of goods and services
  • The increase in labour costs could have disemployment effects, such as laying off employees, hiring fewer employees, or reducing hours

Human rights:

  • There will likely be employers and employees bound by the terms of an FPA negotiated by unions or employer organisations they are not affiliated with – undermines freedom of association
  • Once FPA bargaining has been initiated, an FPA will result. Initiation also only requires assent from employees, employers do not have a say – undermines voluntary collective bargaining


NZTU: Fair Pay Agreements = wage control

The New Zealand Taxpayers’ Union is warning against the Government’s plan for Fair Pay Agreements, calling the policy a form of wage control.

Union spokesman Jordan Williams says, “This is an incredibly backward policy that lets Wellington decide pay rates for entire sectors and industries. It’s a major step towards central control of the New Zealand economy, and a complete denial of the diverse circumstances and needs of individual businesses.”

“Higher wage costs will ultimately be passed on to consumers – an enormous regulatory tax. And bureaucratic, inflexible wage agreements will create avenues for costly litigation.”

“The Government’s handout for Business New Zealand stinks of a cynical attempt to buy support for the policy. But the group being paid to support wage control are sticking to their guns and pointing out how destructive it is. Good on them.”