Interview: The Baby Drought
Industrial: Lies, AWAs and Statistics
Workplace: The Invisible Parents
History: Bruce’s Big Blunder
Politics: All God's Children
Economics: Spun Out
International: Shakey Trials
Legal: Civil Distrubance
Review: Crash Course In Racism
Poetry: You're Fired
The Locker Room
An Act of Faith
Broken Hill Confronts "Choice"
Soaring Mercury Sparks Walk Off
Education Stands Up To Howard Assault
Remembering Workers In Cairns
Fair Go For Injured Workers
A Question Of Choice
Galahs Up The Cross
Labor Council of NSW
For those who experienced the failed New Zealand experiment of the 1990s, the Howard government's industrial relations agenda has an eerie ring of déjà vu.
Although New Zealand and Australia are different countries, they share many similarities. The general population of both countries share an expectation of some sort of fairness at work. Workers on both sides of the Tasman expect to have workplace laws supporting minimum workers' rights.
On May 15 1991 those rights went out the window for New Zealand workers when the governing National Party introduced new labour law called the Employment Contracts Act (ECA).
Before the ECA New Zealand workers were covered by occupational and industry awards negotiated by unions and personal grievance rights for dismissal and unfair treatment were accessed through union membership.
The ECA threw out the award system and replaced it with a system where the relationship between individual worker and employer was central.
In the ECA the word "union" was virtually omitted. The ECA was all about the individual worker negotiating with their employer. The worker could chose to be represented in negotiations by a "bargaining agent". A bargaining agent could be anyone at all - from a lawyer to the next door neighbour.
Almost overnight the ECA:
Impact of the ECA on workplaces
The impact of the ECA was immediate and devastating. In 1990 the minimum pay and conditions of over 700,000 New Zealand workers was determined by an award or collective agreement. By the year 2000 that number had nearly halved to around 400,000.
Almost immediately workplaces were littered with fixed term contracts, contracting out and other "flexible" work arrangements. In this environment illegal "sweatshops" sprung up and prospered.
In case after case, workers were done over and exploited, and left with no legal remedy.
A letter from a supermarket checkout supervisor to the Department of Labour summed up the impact of the ECA on workplaces:
"As soon as the Employment Contracts Act came in everything changed in this place and we were told - now he'd do it his way. First he got rid of the union, and some were threatened that if they belonged to the union they would be down the road. The contracts were never negotiated. We were called in one by one and given this printed document with a place to put your signature. Some of the young ones were not allowed to take their contracts home for their parents to read. The first year all of us who already worked there got penal rates. As people left or were sacked, the new ones went on to a flat rate with no set amount - they were all getting different wages. Within a year there was a 90% rollover of staff."
Impact on quality of jobs and wages
As the take it or leave it workplace culture spread, the quality of jobs plummeted. From 1991 to 1999 growth in full time employment was 15.5% compared to 36% for part time jobs, including part time jobs of as little as one hour a week.
The numbers of "working poor" dramatically increased, as countless jobs were casualised, reduced to very part time hours and contracted out.
The number on benefits soared - increasing by over 100,000 from 1991 to 1999.
Real wages fell. From 1991 to 1996 median incomes for wage and salary earners increased by less than 10%.
But, when the total loss of conditions and allowances was considered, the real impact was even greater. A study of supermarket pay rates showed that while real wage rates in that sector fell by 11% between 1987 and 1997 for those working Monday to Friday, those whose work included weekends had a 33% real pay cut.
Young workers suffered even greater cuts as new workers started under the ECA and "grandparenting" of conditions created intergenerational differences. Of course those reduced conditions eventually flowed on to all workers.
The state-set minimum wage moved 14% during the ECA, while inflation rose 18%.
Were these results a surprise to government? A 1993 Treasury Budget Report reveals things were going according to plan:
"An increased dispersion in wages is expected over the next three years. Wages of professionals, managers, and other skilled people, especially those employed in the profitable and productive export sector, are likely to rise above the rate of inflation. On the other hand, the wages of the unskilled, especially part time and young workers (where turnover may be relatively high) will probably have no wage increases and new entrants may start on lower pay rates than existing workers".
The impact on union membership
A major factor in the deterioration in pay and conditions was the rapid decline in union membership
Business had been calling for IR reforms for some time and embraced the ECA. From 1984 New Zealand went through a massive corporation and privatisation programme and many business leaders saw IR as the final piece of the puzzle.
Predictably business and politicians who supported the ECA attempted to claim improvements in employment and productivity. They pointed to the nearly 300,000 jobs created from 1991 to 1999, conveniently ignoring the rise in casual and pecarious work and the dramatic increase in underemployment.
In fact, the level of underemployment (those in part time work seeking more hours or full time work), trebled between 1990 and 2000.
And despite the creation of "jobs", unemployment averaged 8.8% for the five years after the ECA was introduced.
From 1985 to 1996, New Zealand performed worse than the OECD average on employment, GDP growth, labour productivity and export volume growth.
Over this period New Zealand fell to 23rd out of 26 developed countries in overall productivity.
The ECA years were typified by low wage, low productivity workplaces. Given that the ECA was intended to promote efficiency in the labour market, it was a major disappointment to its supporters that productivity statistics were so woeful.
While labour productivity growth from 1993 to 1998 averaged 0.5%, across the Tasman Australia managed an average of 3.2% in the same period.
A factor in the fall in productivity was morale. Trust, loyalty, and good faith in the workplace collapsed under the ECA. That collapse resulted from employer attitude and an obsession with reducing unit labour costs at the expense of investing in good workplace relationships and skill development.
Real wages in 1997 were lower than in 1974. Median incomes fell by 13.4% between 1986 and 1996.
The architects of reform who predicted "short-term pain before long-term gain", were self congratulatory when New Zealand's economic growth rate bounced back to a 3.3% average between 1992 and 1998. Unfortunately this soon petered out and steadily declined until growth slipped into negative territory in 1998, when New Zealand posted the fourth worst growth in the OECD. Even at the time of improved growth, the performance was still almost a full percentage point lower than Australia achieved during the same period.
The Social Impact
New Zealanders like to think of their country as one that has avoided the excesses of poverty and inequality that characterise some comparable countries elsewhere in the world.
Up until the early 1970s, that belief might have had some validity. But after the reforms began in the mid-1980s, inequality in New Zealand grew steadily and at a rapid rate.
There is an abundance of evidence of this.
In 1999 a Labour/Alliance government was elected in New Zealand and the ECA was repealed and replaced with the Employment Relations Act (ERA).
While the new law has restored the place of unions and collective bargaining as the focus of labour law, and has since been amended to further strengthen collective bargaining, repairing the damage done under the ECA is a huge undertaking.
Five years into Helen Clark's minority Labour government a widely acknowledged wages gap somewhere in the order of an average 20% remains between Australia and New Zealand, as does ongoing concern about an exodus of skilled kiwis overseas in search of higher wages.
The award system has not been reinstated and the legacy of the Employment Contracts Act remains.
Although the current government has increased the minimum wage 36% since coming to office, it is still only $9.50 an hour.
Four weeks annual leave will finally become standard for all workers in 2007.
On the positive side significant gains by a number of unions, notably nurses and teacher unions, through reinstating industry bargaining have lifted the spirits of the trade union movement, and there is a renewed optimism as low paid workers have embarked on a nation wide campaign for a 5% wage increase.
According to New Zealand employers, who have had it all their own way for far too long, this will just about bring the country to its knees. For many working kiwis who saw only wage and conditions cuts during the 1990's it's barely a catch-up.
It is crystal clear to anyone who experienced the devastation of the ECA that Howard's agenda is bad for Australia - bad for workers, bad for unions and bad for pay and conditions. Howard's agenda is set to impact on quality of jobs, quality of life, on families and communities.
What may come as more of a surprise is the inevitable conclusion from the New Zealand experience that the Howard agenda will also be bad for business, for productivity and growth.
It must be opposed.
Lyndy McIntyre is NZNO communications adviser with the New Zealand Nurses' Organisation, currently seconded to the ACTU.
|Search All Issues | Latest Issue | Previous Issues | Print Latest Issue|
© 1999-2002 Workers Online