‘Fair Pay’ team announced

The Government has set up over a hundred panels, working groups, reviews, committees and whatever esle they have called them. They refer to the latest as ‘a ‘Fair Pay Agreeement’ team.


Government’s Fair Pay Agreement work to begin

The Government’s work on establishing Fair Pay Agreements, helping design a collective bargaining system to lift wages and productivity in New Zealand, will be led by former Prime Minister the Rt Hon Jim Bolger, says Workplace Relations and Safety Minister Iain Lees-Galloway.

“The Government has a vision for a highly skilled and innovative economy that delivers good jobs, decent work conditions and fair wages, while supporting economic growth and productivity,” says Mr Lees-Galloway.

“The best way to create a high-wage economy is through productivity growth, and we must ensure that workers and businesses benefit from economic growth. While wages have generally grown in the top-two and bottom-two deciles, wages for middle New Zealand have not kept up and as a result feel squeezed by rising costs, particularly in housing.

“We can and must do better for middle New Zealanders. Fair Pay Agreements will establish a framework for employers and employees to work together constructively to lift wages and productivity.

“Workers and employers know their sector best. By working together through effective engagement and bargaining cooperatively, workers and employers can set standards that are relevant to their sector and support productivity and growth.

“The aim of FPAs is to prevent a race to the bottom, where some employers are undercut by others who reduce costs through low wages and poor conditions of employment.

“Through the team led by Jim Bolger, the Government intends to introduce legislation to allow employers and workers to create Fair Pay Agreements that set minimum employment terms and conditions for all workers in the industry or occupation covered by the agreement.

“Fair Pay Agreements will help lift wages and conditions and ensure good employers are not disadvantaged by paying reasonable, industry-standard wages.

“It is time to move toward new models of bargaining. It is time New Zealand adopts a sector-level approach that is common across the developed world.

“Mr Bolger will lead the team of ten to develop recommendations on the design of a Fair Pay Agreement system, which is due to report back by the end of the year, and we will work closely with businesses, organisations and workers to develop a new and enduring framework that is good for employers and workers,” says Iain Lees-Galloway.

The team includes worker and business representatives, those with practical on-the-ground experience and experts in law, economics and bargaining systems.

Members of the Fair Pay Agreement team:

Rt Hon Jim Bolger – 35th Prime Minister of New Zealand, former Minister of Labour

Dr Stephen Blumenfeld – Director, Centre for Labour, Employment and Work at Victoria University

Steph Dyhrberg – Partner, Dyhrberg Drayton Employment Law

Anthony Hargood – Chief Executive, Wairarapa-Bush Rugby Union

Kirk Hope – Chief Executive, BusinessNZ

Vicki Lee – Chief Executive, Hospitality NZ

Caroline Mareko – Senior Manager, Communities and Participation, He Whānau Manaaki o Tararua Free Kindergarten Association

John Ryall – Assistant National Secretary, E tū

Dr Isabelle Sin – Fellow, Motu Economic and Public Policy Research, and Adjunct Senior Lecturer at Victoria University of Wellington

Richard Wagstaff – President, New Zealand Council of Trade Unions

The terms of reference are available at MBIE’s website.

Nation – immigration and banking

On Newshub Nation this morning:

Immigration – Lisa Owen asks Immigration Minister Iain Lees-Galloway about Labour’s plan to reduce immigration by 20-30,000 and what the effect will be on our economy.

Banking – Reserve Bank Governor Adrian Orr talks about lifting the lid on New Zealand banking practices and which areas concern him most.

Overdue attempt to fix hopeless Holidays Act

The Holidays Act 2003 introduced new ways of ensuring employees get three weeks holiday per year (increased to four weeks in 2007), and also new ways of calculating holiday and sick pay and other leave.

The intent was good, and it works well for people who keep working regular hours, but in practice it has been terrible where employees work variable hours and have changing work patterns. Abiding by the law is difficult.

The last Government tried to sort it out but gave up, putting it in the too hard basket, leaving it a basket case.

Many employers then found out that they had been calculating holiday pay wrong (forced into attempting workable approximations) and some have had to front up with a lot of money to set things sort of right.

Since then employer groups and unions seem to have accepted that their stand off was not working and a solution needed to be found.

The Government has just announced they will review the Holidays act and try and sort it out. This time they have called it a taskforce, as they have already overused the terms working group, committee, inquiry and review.

But this one is overdue and needs to come up with a practical solution.


Tripartite taskforce to review Holidays Act

A taskforce that brings business, workers and Government together has been established to recommend changes to the Holidays Act 2003, says Workplace Relations and Safety Minister Iain Lees-Galloway.

“The Holidays Act was enshrined in law to provide for minimum entitlements to annual holidays, public holidays, sick leave and bereavement leave, and protect worklife balance for workers,” says Iain Lees-Galloway.

“However, there’s been enormous change in our labour market over the past fifteen years and it’s clear we need to look at the Holidays Act with a fresh pair of eyes and ensure it is fit for modern workplaces and new working arrangements.

“We need law that provides certainty to both employers and employees so that employees receive their correct entitlements. The legislation needs to be straightforward and simple to implement, and deliver fair rest and entitlements for workers.

“With an increasing variety of work patterns and pay arrangements, the legislative requirements of the Act are proving difficult and costly for employers to apply and employees are not receiving their full entitlements.

“The time is now right to directly address the underlying issues with the Act. I’ve been approached by Business NZ and the Council of Trade Unions to help tackle this vexed and complex set of issues and I’m excited about the work we have ahead of us.

“The working group will be chaired by Gordon Anderson, a law professor at Victoria University with extensive experience in employment law, both as an academic and as a barrister. He will chair a taskforce that brings together employer, worker and government representatives.

“I expect this group to consult widely to gain a comprehensive understanding of the issues with the current legislation, and work closely with technical experts such as payroll and other business service providers to assist with the design and testing of policy options to ensure they will work well in practice. The group will report back with recommendations in mid-2019.

“The Labour Inspectorate at the Ministry of Business, Innovation and Employment (MBIE) has been working with a wide range of stakeholders to improve compliance with the Holidays Act through the co-creation of new guidance and tools. I am grateful to all those people who contributed to this work.

“Employers are obligated to remediate employees for current and historic underpayments and must be compliant with the current Act until new legislation comes into effect.

“MBIE and the Labour Inspectorate will continue to provide support and engagement on these issues to assist employers in the meantime,” says Mr Lees-Galloway.

For more information on the Holidays Act 2003 review, visit here.


Being compliant with the current act can be very difficult, because the current law just doesn’t allow anywhere near properly for variables.

Q&A – workplace relations and employment law

Iain Lees-Galloway looks one of the Labour MPs who has managed the transition from Opposition to ministerial responsibilities in government very well. He is interviewed on Q&A this morning.

Lees-Galloway is ranked 13th in Cabinet.

A recent media release:

The Government’s draft strategy for improving the health and safety of New Zealand workers over the next 10 years has been released, with submissions now being called for, says Minister for Workplace Relations and Safety, Iain Lees-Galloway.

His responsibilities:

  • Workplace Relations and Safety
  • ACC
  • Immigration
  • Deputy Leader of the House

He has managed to keep a low profile on Immigration given Labour’s promises to significantly reduce immigration, but net migration numbers have barely moved. There is no indication this will be covered in the interview. However there’s a close relationship between employment and immigration, and there have been a number of recent reports of labour shortages in various parts of the country.

Unions currently represent about 17% of the workforce. The Government has no intention of making joining a union compulsory – Lees-Galloway says that the need for freedom of association is a key reason for this.

It’s a good interview, Lees-Galloway sounds like he knows his stuff, tries to explain rather than avoid answering, and comes across well.

He is asked about immigration numbers, and he diverts here to say he isn’t focussed on numbers but in making sure they get labour into ‘the right places’.

Pushed on getting immigration numbers down he waffles around it and eventually falls back on “getting immigration better”.

Minimum wage rise versus jobs

The effect that the raising of the minimum wage might have on jobs has often been argued but never been proven. It depends on a number of factors, like how much the minimum is raised, and what the business and employment situation is like at the time.

Government officials have warned that the latest increase, due to come into effect next week (1 April), could jeopardise up to 3,000 jobs but the Minister of Workplace Relations disagrees.

NZ Herald: Minimum wage rise to $16.50 at the end of next week could cost 3000 jobs, says MBIE

Government officials say lifting the minimum wage to $16.50 an hour could see a loss of up to 3000 jobs.

Boosting the minimum wage was part of the Government’s 100-day plan and is set to take effect at the end of next week, on April 1.

In its regulatory impact statement, officials from the Ministry of Business, Innovation and Employment said an increase “may have negative employment impacts which include lower job growth and reduced work hours”.

“The estimated restraint on employment for a minimum wage of $16.50 is 3000,” the statement said.

It also noted that the effect on employment “is heavily debated in economic literature … there is no clear consensus”.

And the Minister, Iain Galloway, debates their warning.

Workplace Relations Minister Iain Lees-Galloway said workers had not had a fair share of economic growth, and the boost to the minimum wage was only one part of the Government’s strategy.

“The Government considers advice alongside a range of other factors, including prior experience increasing the minimum wage – which has always been positive.

“I note that Treasury also advised the best time to raise the minimum wage is while the labour market is strong and tightening.

“Treasury forecasts that the unemployment rate will keep falling towards 4 per cent over the next three years, and that average wages will rise on average at about 3 per cent a year over that time, due to a tight labour market.”

So Lees-Galloway seems to be dismissing the MBIE advice, and choosing to use different Treasury advice to support the increase.

This is a fairly modest increase in the minimum wage, from $15.75 to $16.50, but bigger increases are planned.

Labour and New Zealand First have agreed to increase the minimum wage to $20 an hour by April 2021.

One could guess that MBIE may have further job loss warnings if it is bumped up more.

And what if in the future Treasury advises that the labour market is no longer strong and tightening? Would the Government go against that advice?

They already have, last month. Stuff: Labour warned if economy turns, minimum wage plans will hit the young and unskilled

Treasury is urging the Government to ditch its plan to abolish the youth rate, warning that minimum wage pledges will hit the prospects of younger, unskilled workers if the economy cools.

Advice from Treasury officials released under the Official Information Act shows Treasury expressing concerns that a commitment to a substantial increase in the minimum could harming the prospects of the very people the rate was meant to protect.

While Treasury explicitly said it supported hiking the minimum wage by 75 cents an hour to $16.50 in April, as the economy and labour market would see little impact, officials warned the three-year plan to get the minimum wage to $20 could have a series of unintended consequences.

These ranged from hurting the local economy in already slow growth regions, the risk that once New Zealand’s minimum wage was on a par with Australia’s, fewer young, low-skilled worker would cross the Tasman for work and that higher minimum wages “has been shown” to attract young people to leave education to enter the workforce.

Lees-Galloway has been quite selective in picking advice to justify Government policy.

He was a Nurses’ Organisation organiser (aka a union official) prior to becoming an MP,

Treasury warnings about minimum wage, youth rates

It isn’t surprising to see a warning from Treasury about possible adverse effects of pushing up the minimum wage too much, and of abolishing youth rates.

Stuff: Labour warned if economy turns, minimum wage plans will hit the young and unskilled

Treasury is urging the Government to ditch its plan to abolish the youth rate, warning that minimum wage pledges will hit the prospects of younger, unskilled workers if the economy cools.

Advice from Treasury officials released under the Official Information Act shows Treasury expressing concerns that a commitment to a substantial increase in the minimum could harming the prospects of the very people the rate was meant to protect.

While Treasury explicitly said it supported hiking the minimum wage by 75 cents an hour to $16.50 in April, as the economy and labour market would see little impact, officials warned the three-year plan to get the minimum wage to $20 could have a series of unintended consequences.

These ranged from hurting the local economy in already slow growth regions, the risk that once New Zealand’s minimum wage was on a par with Australia’s, fewer young, low-skilled worker would cross the Tasman for work and that higher minimum wages “has been shown” to attract young people to leave education to enter the workforce.

But the advice provided a key policy challenge for the Labour-led Government, warning that should the economy turn, a world-leading minimum wage would harm young people, so the youth rate, also known as the starting-out rate, should be maintained.

I would replace “should the economy turn” with an inevitable “when the economy turns”.

Treasury said that in economic downturns, employers tended to keep existing workers on without cutting wages, but cut costs by not hiring and employing new staff on lower pay rates.

“This concentrates the minimum wage impact on the groups entering the labour force, like young workers, and those with low skills. The higher proportion of young people on the minimum wage in New Zealand will exacerbate this effect and magnify its impact on youth unemployment.”

“Young workers with low skills are particularly hard hit, and this could impact on those ethnic groups with many young people with low qualifications like Maori and Pacific,” Treasury warned, noting that even during the current buoyant job market, unemployment for young people generally, and especially young Maori and Pacific people, was far higher than for the general population.

There is a problem when unskilled workers remain on low wages.

But many people get onto the employment ladder at minimum wages and youth rates and work their way up.

If those low wage starting opportunities are scrapped it can make it harder for young people and unskilled people to get a start.

Set at 80 per cent of the minimum wage, the youth rate can be paid to workers aged 16-19 in certain conditions including when they first enter the workforce, are coming off a benefit or are in industry training.

Treasury urged the Government to consider maintaining the system, saying it provided “a safety valve in weak economic conditions”.

“We are aware that the starting-out rate is currently not widely used by employers (so currently the consequences on young people of keeping it are low) but it provides a safety-valve of enabling increasing use in an economic downturn.”

Has the Government listened to these warnings?

While Labour has consistently promised that within 12 months of being elected that it would abolish the youth rate, on Saturday Workplace Relations Minister Iain Lees-Galloway was non-committal.

“It’s something that we will include in our policy development and we will work with our Government partners on.”

Or is this another case of walking a different walk to their campaign talk?

 

Workplace legislation announced

Labour had promised workplace legislation in Taking action in our first 100 days:

  • Increase the minimum wage to $16.50 an hour, to take effect from 1 April 2018, and introduce legislation to improve fairness in the workplace.

They have made some changes to publicised policy on the 90 day after negotiations with NZ First, and have now announced their legislative plans. Some of these changes undo changes brought in by the previous government.


Legislation for fairer workplaces announced

The Government has taken an important step toward creating a high-performing economy that delivers good jobs, decent work conditions and fair wages with a new Bill to amend the Employment Relations Act 2000, says Workplace Relations and Safety Minister Iain Lees-Galloway.

The Bill is designed to provide greater protections to workers, especially vulnerable workers, and strengthen the role of collective bargaining in the workplace to ensure fair wages and conditions.

“Making life better for working New Zealanders is a fundamental value for the Labour-led Government,” says Mr Lees-Galloway.

“Too many working New Zealanders are missing out on the benefits of economic growth under the current employment relations system.

“Good employment law strikes a balance between employers and workers. Under the previous Government the balance tipped away from fair working conditions for workers. We will restore that balance.

“Many of the changes in the Bill are focused on lifting wages through collective bargaining.  Wages are too low for many families to afford the basics. This Government believes everyone deserves a fair day’s pay for a fair day’s work.

“We will also reinstate key minimum standards and protections to employees, such as the right to prescribed meal and rest breaks and limiting the use of 90 day trial periods to businesses with fewer than 20 employees.

“This legislation is the first step in the Government’s commitment to creating a highly skilled and innovative economy that provides good jobs, decent work conditions, and fair wages.

“This is the start of a progressive programme in workplace relations which includes the passing of historic Equal Pay legislation, lifting the minimum wage to $20 by 1 April 2021, and the creation of a framework for Fair Pay Agreements.

“The legislation is expected to have its first reading in early February and I encourage everyone interested in this important legislation to have their say at the select committee process,” says Mr Lees-Galloway.


Employment Relations Amendment Bill – Summary

Rights for employees

These modifications are largely roll-backs of the previous Government’s changes which weakened
employees’ rights at work:

  • Restoration of statutory rest and meal breaks. These will be subject to a very limited exception
    for workers in essential services who cannot be replaced (such as air traffic controllers).
  • Restriction of 90 day trial periods to SME employers (less than 20 employees). This balances the
    insecurity of 90 day trials to workers against keeping barriers to hiring low for small businesses.
  • Reinstatement will be restored as the primary remedy to unfair dismissal. This was
    infrequently used but recognises that in some circumstances the best outcome is for the employee to
    return to work.
  • Further protections for employees in the “vulnerable industries” (Part 6A). These changes
    repeal the SME exemption from coverage, provide more time for employees to decide whether to
    transfer to a new employer, and provide greater safeguards on transfer of inaccurate information.

Collective bargaining and union rights

Most of these modifications are roll-backs of the previous Government’s changes:

  • Restoration of the duty to conclude bargaining unless there is a good reason not to. This is
    complemented by repeal of the process to have bargaining declared over.
  • Restoration of the earlier initiation timeframes for unions in collective bargaining.
  • Removal of the MECA opt out where employers can refuse to bargain for a multi-employer
    collective agreement.
  • Restoration of the 30 day rule where for the first 30 days new employees must be employed under
    terms consistent with the collective agreement.
  • Repeal of partial strike pay deductions where employers can garnish wages for low level
    industrial action. Employers have deducted pay for actions such as wearing t-shirts instead of
    uniforms.
  • Restoration of union access without prior employer consent. Union access will still be subject
    to requirements to access at reasonable times, and places having regarding to business continuity,
    health and safety.

New proposals are:

  • A requirement to include pay rates in collective agreements. This is based on recent case law.
    Pay rates may include pay ranges or methods of calculation.
  • A requirement for employers to provide reasonable paid time for union delegates to represent
    other workers (for example in collective bargaining)
  • A requirement for employers to pass on information about unions in the workplace to
    prospective employees along with a form for the employee to indicate whether they want to be a
    member.
  • Greater protections against discrimination for union members including an extension of the 12
    month threshold to 18 months relating to discrimination based on union activities and new
    protections against discrimination on the basis of being a union member.

More on Paid Parental Leave plans

 

 

Paid Parental leave differences and confusion

One of the new Government’s priority policies, being advanced under urgency in Parliament, is an increase in the length of time Paid parental leave will be paid for.

National has said they will vote for the bill, but have suggested a change.

The bill allows both parents to share the allowed number of weeks paid parental leave, but not at the same time. National wants to give parents the choice of taking leave at the same time if they want to, so for the first few weeks both can be on paid leave.

There are confused responses from Labour. Newshub – Confusion in Labour as National pushes for shared parental leave:

The National Party will support Labour’s legislation to provide 26-weeks of Paid Parental Leave (PPL), but wants it tweaked so both parents can take leave at the same time.

Labour’s response to the demand has been confused. While Workplace Relations Minister Iain Lees-Galloway says the policy could be considered, Acting Prime Minister Kelvin Davis appeared to rule it out.

Labour’s policy allows parents to split 26 weeks of PPL between them but not take it at the same time.

Their policy is to increase PPL to 22 weeks next year, and to 26 weeks in 2020.

Amy Adams, National’s spokesperson for workplace relations, says that’s inflexible and “going back to the nanny state of telling families how to arrange their lives”.

Making ‘nanny state’ accusations is unlikely to help get cross-party agreement.

“The proposal we’re talking about would simply allow families to choose whether to take some or all of the leave together,” she said on Tuesday morning.

Ms Adams said the option of taking PPL together would be particularly helpful for parents of twins, premature babies and babies with older siblings. She said it wouldn’t add any additional cost.

National campaigned on the policy to increase PPL to 22 weeks and to allow parents to take some of those 22 weeks off at the same time.

Acting Prime Minister Kelvin Davis…

…appeared to cold-shoulder National’s idea, saying Labour is happy with the bill as is.

“We’re really excited by the fact that by 2020, parents will be able to take 26 weeks’ paid parental leave.”

“We’re happy with the bill that we’ve put forward.”

Willow-Jean Prime…

…said she knows how difficult being a new mother can be and would be talking to Minister for Workplace Relations Iain Lees-Galloway about adopting National’s amendment.

“That is one of the most challenging times – as soon as Mum has given birth – and I know in our own situation, that was a time I really appreciated having my husband there. Being a school teacher he only had about a week and that was difficult.”

Mr Lees-Galloway…

…is leaving the option open.

But he said the way it’s being explained by National at the moment goes against the spirit of the bill because it would reduce the overall amount of time parents could spend with babies.

An odd response. Labour’s stance would eliminate the possibility of the second parent from taking paid parental leave at the same time as the other parent, for example immediately after the baby was born.

It looks like Labour is lacking leadership (Jacinda Ardern is away in Asia) and lacking coordination, and Adams is lacking a conciliatory approach. Attack and criticism is not a good way to work together, as they should be on this bill.

National criticise urgency but support Paid Parental Leave bill

The first bill to be considered by the new Parliament was debated under urgency, a move criticised as hypocritical, but National also voted for the bill, saying they shared policy to increase paid parental leave.

RNZ: Govt puts Parliament into urgency to start 100-day plan

The new government made a swift start on its 100-day plan, putting the house into urgency within hours of Parliament’s state opening.

The first bill to be debated under the new government enacts the extension to paid parental leave announced by the Prime Minister on Monday.

Minister for Workplace Relations Iain Lees-Galloway told Parliament the bill was a straight-forward one.

“It provides for a an increase in the duration of paid parental leave from the current 18 weeks to 26 weeks.

“This is achieved in two stages, first an increase to 22 weeks in 1 July 2018, with a further increase to 26 weeks on 1 July 2020.”

Despite National’s objections to the bill, it voted in support – saying it was in fact its policy as well to extend paid parental leave.

ACT voted against it.

The bill has to pass further readings before becoming law.

The bill is being pushed through under urgency, meaning it will skip the committee (and public submission) stage.

That led to accusations of hypocrisy from the Opposition, arguing Labour had castigated the National-led goverment for using urgency.

The legislation was being pushed through without being sent to a select committee, as the government argued it had already been through that process twice under the previous National government.

The first time it was voted down at third reading and the second time it got there it was vetoed by National.

It was vetoed on fiscal grounds, with the National led government saying they had no funds available.

Senior National MP Amy Adams told the House she was witnessing an incredible turnaround of principles by the parties now on the government benches.

“From parties who until now have derided, castigated, abused, got outraged over the use of urgency.

“When the National-led government took urgency it was very clear as the the need and the reasons for doing so.”

Ms Adams said the rushed, hurried, seat-of-the-pants process by the Labour-led coalition meant the bill was very light on detail.

New Zealand First’s Tracey Martin, the Minister for Children, said the bill had twice been through select committee with more than 6000 submissions, 99 percent of which were in support.

She said the bill was going through under urgency, because it was urgent.

“Because our families need it, our babies need it, our mothers and fathers need it – they need the security to know that as soon as possible they can plan for this.

I think this bill was probably chosen to push through under urgency because it had been debated last term in Parliament as a Member’s Bill, and it was a safe one to start with, uncontroversial and assured of passing.

But it is highly debatable whether it can be called ‘urgent’.

And the planned implementation doesn’t seem urgent – an increase in four weeks next July, and an increase of another four weeks in 2020.

The first bill to be considered by the new Government may signal the approach by National – a mix of apposition, criticism and cooperation.