Opinion: This week a group of people in Wellington will begin the process of cutting off “Fair Pay” agreements in favour of pay rates being set by “the market”. We will hear how this will avoid pay rates being set at unaffordable levels and continuing to allow “flexibility” to encourage more employment. The people promoting this do not have their pay set by “the market” but by an administrative process which pays them without regard to affordability or performance.
The high-paid executives of business, government and their interest groups, many of whom will applaud the move, also do not experience what those who might benefit from “Fair Pay” agreements do. Their pay is set by their peers, mediated by a complex web of comparative surveys and “job sizing” which build in a mutual escalator into their earnings.
Right through the ranks of employed earners in larger business and government jobs, various systems are applied to determining pay scales that standardise and compare roles. The long-overdue exercises in pay equity apply complex analysis of roles and comparisons for outcomes which are part-administrative and part-negotiated. This is regarded as normal.
None of these systems are perfect but they apply some kind of objective analysis about a job and the person doing it, compared with others. They are not called “Fair Pay” arrangements but that is what they are (sometimes more than fair at the top end).
We used to have a system right through the hierarchy of earnings that established such relationships through “awards” or agreements negotiated on an industry basis with unions. This had faults too, with “relativities” often too rigid over time. Employers and their organisations did not always like the process or the claims but recognised the value in setting comparable minimum standards.
I’m pretty sure we will find that with or without legislative support some employers and unions will still seek such arrangements especially in sectors where employers are competing for substantial contracts. It is no accident that bus drivers employed in just such a situation are the most advanced in “fair pay” negotiations.
In many other situations, business looks for certainty and stability and a “fair” market to compete in, not just a race to the bottom on wages. But if a market is structured in such a way that a race to the bottom is encouraged then they will start racing there.
Governments like to talk about creating better jobs and wages. They have a key role in having employment markets structured so this is encouraged, just as they do in other aspects of competition, product and personal safety and environmental impacts. In practice all efficient markets are designed and operated to optimise such outcomes.
But at the lowest levels this does not apply – employment is more precarious and shifting. With high immigration many new employees are vulnerable. As are less skilled young people and those mixing paid work with study or whānau/community commitments. We can abandon this category simply to the vagaries of the “market” but we know that will entrench low pay, low productivity, and poor working conditions.
Or we could respond with just a minimum wage and standard conditions across the whole economy. No flexibility there, based on applying a lowest common denominator, and costly or lax monitoring and enforcement.
Or we could establish a path for collective industry standards. Ideally negotiated but where necessary arbitrated by a competent authority. Oh yes, that is what has been established and is now being abolished. Without being tried, without evidence, and quite different to how we treat the more privileged parts of our workforce. And, of course, quite contrary to how the Government deals with its own employees.
You have to wonder about that last point. If no controls or structures or systems are best why does the Government not do that? The answer is clear. The economist in me can see in an instant that the transaction costs of such a system would be completely forbidding. In simpler terms – because being efficient and fair means you need a system of some kind for both employer and employee. You don’t have to be a radical or a socialist to see this – just responsible.
No doubt there are some ideologues around. But practical business people, those who want “strong and stable” organisations, should see it this way. Just as they value industry safety and other standards they will value strong, stable industry pay and working conditions, so they can compete on their innovation, investment and management skills not just using cheap labour.
Reversing the fair pay legislation is another example of the increasing gap between this government’s actions and its words about being a government for all.
This hypocrisy is increased by the decision to not require any regulatory impact analysis on the reversal of this legislation. Not requiring a regulatory impact analysis can only be seen as an attempt to conceal the real costs of this ideological drive to repeal the fair pay legislation.
Further, it is a graphic demonstration of the dishonesty of both coalition agreements, which include a whole section on ongoing decision making principles which is not being applied.
It looks like it is more important to do what its donors want than it is to govern for all.
Rob may care to look at the “Collective Bargaining” page at the OECD, not exactly known as a centre for left-wing thought, which states “Collective bargaining and workers’ voice are key labour rights, as well as potentially strong enablers of inclusive labour market. As the digital transformation, globalisation and demographic changes, are re-shaping the labour market, collective bargaining is well placed to design solutions to emerging collective challenges. Yet, its capacity to deliver is threatened by the weakening of labour relations in many countries, the flourishing of new − often precarious – forms of employment and the progressive individualisation of employment relationships.” The centrality of collective bargaining as key to labour market improvements is discussed in much greaterdetail in the OECD publication “Negotiating Our Way Up”. I suspect this is probably not on the current Minister’s reading list or that of economists who work on the principle that if the data don’t support the neoliberal theory change the data.
Repeal of the Fair Pay Acts was party policy for National. They have been elected, therefore failing to repeal this legislation would constitute reneging.
‘The high-paid executives of business, government and their interest groups, many of whom will applaud the move, also do not experience what those who might benefit from “Fair Pay” agreements do.’
It’s important to see this in the longer and deeper terms of historical and cultural factors. These have always churned in the collective as questions of ‘who are we’. And now more than ever they are at play. Ove the last 40 years, the global economy has been focused mainly on widening the gap between rich and poor, that is growing inequality. This government is playing to this focus with a desperation which exposes their perceived lack of a need to justify. It’s now or never for these desperadoes as the climate crisis is illustrative of the need to curb exploitation as the applicable ideology in human affairs, falsely described as ‘human nature’.
“Who were we”, “who are we”, “who must we become”.
One of the opening lines of the new government was that we are “under new management”. The problem is that we are not a company or a corporation, we are a nation of people, of human beings, as well as our lands, our waters, and the flora and fauna that comprise Aotearoa NZ. To reduce governance to “management”, or to conflate the two, does not bode well for our future as a nation. For example, abandoning Fair Pay could work well for “Management”, but for the human beings who comprise the nation, and for whom a responsible government has a duty of care, …not so much.