NZ Herald editorial on Labour’s dopey industrial relations policy

Looks like the NZ Herald editorial duties for yesterday were rostered to Fran O’Sullivan or some other business editor.

The Labour Party leader owes his position to the votes of affiliated trade unions and it is beginning to show. Andrew Little has announced a policy for industrial law that would represent a considerable step backwards for this country. If Labour becomes the government in September it will reinstate industry awards by a different name. It will call them “fair pay agreements” that will set the minimum pay and conditions in each industry. Little says the policy was inspired by the recent “pay equity” settlement for aged care workers, where the Government brought employers and unions together and in the end the Government made the settlement.

In most other countries this would be called a bribe for policy. For Labour, they just install the leader and he does what they want.

But aged care is a heavily-subsidised industry and the settlement is being financed by the taxpayers. To force all employers in an independent industry to come together and negotiate minimum rates and conditions would take a great deal of competitiveness out of the New Zealand economy. It ought to be enough for a government to lift the minimum wage across the whole economy which Labour proposes to do, initially by 75c to $16.50 an hour, and ultimately, the party hopes, to two thirds of the average wage. That part of the package is good.

Not so good is the promise to pay the “living wage” ($20.20 an hour) in the core public sector. It is not economically healthy for waged workers in the sheltered public sector to be paid a higher rate than comparable labour in the private sector, whose taxes are the source of public sector pay. Not only would it be unfair but it would pull the best workers into the public sector at the expense of productive industries.

Labour believes paying the living wage would set an example that “good employers” would follow. But employers in the trading sectors cannot simply lift wages at will. Their business has to earn its income from voluntary customers. Unless it can lift its productivity, or its customers are willing to pay higher prices, it could not match the rates Labour would pay from taxation.

Increased wages must equate at least to increases in productivity. The example of Seattle proves, categorically, that it simply doesn’t eventuate and eventually costs people jobs.

The most surprising element of Labour’s workplace policies is its proposal to provide a “referee service” for workers dismissed within their 90-day trial. Though the party hotly opposed 90-day trials when National introduced them in 2009, Labour now says it will keep them. But a referee service would defeat their purpose.

Utterly stupid. All because there are a few ratbag employers. Let me tell you this for free, there are more ratbag staff than ratbag employers.

The trials were designed to reduce the risk for employers in taking on people who, if they prove unsuitable, cannot be dismissed without the firm incurring costly personal grievance procedures. Labour says its referee service would be cheap, quick and not involve lawyers. Yeah right. It would make employers less confident about taking on marginal job applicants and it is those work-seekers who would suffer. Even Labour acknowledges trial periods improve the chances of work for these people, but it seems not to realise the risk of being overruled by a referee service would close many an employer’s door. These look like the promises of a party more anxious to satisfy its core supporters than prepare for government.

The unions pay and now they shall receive.


-NZ Herald

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