The Listener

The Employment Contracts Bill

Roger Kerr 15 APRIL 1991

EXECUTIVE DIRECTOR

NEW ZEALAND BUSINESS ROUNDTABLE

THE EMPLOYMENTS CONTRACT BILL

What will the current arguments over the Employment Contracts Bill look like from the year 2000?

Remember the fuss about waterfront reform? A recipe for anarchy and cutting waterfront wages, it was said. And deregulation of shop trading hours? The end of family life in New Zealand as we knew it.

The outcome? On the waterfront, fewer disruptions than ever before, higher not lower wages, massive increases in productivity and lower costs. And how many people would want to turn the clock back on weekend shopping?

Change is often uncomfortable and a threat to vested interests. The Employment Contracts Bill will put pressure both on employers that have sheltered behind the protections of the old system and on union and worker groups that have benefited from monopoly privileges. As Metro columnist Bruce Jesson recently put it:

"The union bureaucrats maintain that voluntary unionism will disadvantage low-paid sections of the workforce but, in fact, the main victims will be the union bureaucrats themselves. As their memberships shrink, their funds will dry up and many officials will lose their perks and cushy jobs."

But change we must, if we are to get the growth in jobs and incomes that the community wants. Last year the Trade Development Board revealed some staggering statistics: real wages in New Zealand were no higher in 1987 than in 1960, whereas they were around 150 percent higher in Japan and Europe and 70 percent higher even in Australia and the United Kingdom.

Our conflict-driven industrial relations system bears a fair share of the responsibility for this truly abysmal performance. We are still living beyond our means and face a simple choice: cut wages or dramatically improve productivity. Clearly the emphasis has got to be on productivity increases.

In its recent survey of New Zealand, the OECD has again affirmed the need for comprehensive labour reform. Opinion surveys have shown that New Zealanders want voluntary and contestable unionism and freedom for workers to deal directly with employers, either individually or collectively.

The Business Roundtable is strongly committed to a New Zealand where average incomes are high and unemployment is low. We believe this goal will best be achieved by granting employers and employees the freedom envisaged in the Bill.

The Bill moves New Zealand's substantially unique employment arrangements in the direction of other OECD countries, in particular towards the more successful models such as Switzerland and Japan which have the fewest restrictions. Unemployment in both countries is low and incomes per head are amongst the highest in the world.

In Japan and Switzerland, strikes are a rarity. Japanese rail union leaders apologise to the public for the inconvenience of disruptions. Contrast this with the famous declaration of a New Zealand rail union leader a few years ago: "The public can go to hell".

The cornerstone of the Bill is its rejection of the conflict model of employment relations in favour of a recognition of the mutual interests of firms and workers. In place of strife and the class struggle we can expect to see cooperation and the productivity struggle.

Unions can survive in a freer environment if they do a good job. We are likely to see the kind of turnover of the old guard in union leadership that has occurred in New Zealand business as new skills and attitudes come to dominate.

There may be a settling down period with the new Bill but it is already clear that it has massive upside for firms, workers and the unemployed. Labour law around the world is not a generally controversial topic; the merits of better regimes are recognised across the political spectrum. By the year 2000, we will be looking back on 1991 and wondering what all the fuss was about.

Who knows, children may be asking their parents: "What was a strike? What was unemployment?".