There’s been a lot of debate and hard thinking in the Labour Party about the current Employment Relations framework and how it could be part of a cohesive whole in building a high wage, high skill, high productivity, high value economy. The Global Finance Crisis has provided, if nothing else, a chance to rethink the last 20 years of our Employment Relations system, which if we are honest, is still pretty deregulated in New Zealand. The IMF, the OECD and a myriad of economists both here and abroad have, in recent times, pointed to low rates of collective bargaining in first world countries, including New Zealand, as a contributor to the global financial crisis and the high ratios of household debt to income.

Despite Labour’s changes to the Employment Relations Act in 2000 (which were pitched as being “extreme” by some in business at the time), only 9% of New Zealand’s workforce in the private sector are covered by collective agreements. Our government, the Minister of Labour and Labour Department officials go merrily off to the International Labour Organisation every year, confidently asserting that New Zealand’s labour laws provide for the freedom to join unions and collective bargaining rights, yet they know that that reality for the vast majority of workers, accessing these rights is high risk and for many, simply not realistic. So, while the Employment Relations Act theoretically provides for collective bargaining as a means of recognising the inequality of bargaining power, the truth is that most workers’ wages and conditions are still set unilaterally by their employer.

Labour’s wages policy reasserts our founding values of fairness at work as fundamental to a fair society. We aim to help lift wages in New Zealand across the board and to help stem the drift to Australia of our workforce. New Zealand’s economy must be lifted from a reliance on low wages and longer hours to an investment in more productive workplaces where high trust, high skill and high wages are the success indicators of New Zealand business and jobs. And we cannot truthfully talk about social policy and tackling poverty unless we talk about low wages and how to deal with them.

A critical first step, and one which will help the lowest-paid workers directly, is an increase in the minimum wage to $15 an hour, which Labour has long signalled.

But it will take more than improvements to the minimum wage to deliver decent wages for all New Zealand workers. The experience of the past twenty years shows that New Zealand’s current labour market arrangements have led to lower pay for New Zealand workers. Lower pay means New Zealand businesses face fewer incentives to lift productivity and lift investment in workplace, or in workers’ skills and education. It’s a vicious cycle: low wages and low productivity, with New Zealand families bearing the consequences.

Labour’s plan will tackle this long-standing problem. We will amend the Employment Relations Act 2000 to implement a new framework where better pay and standards can be extended through Industry Standard Agreements –  a new form of agreement under the Employment Relations Act (ERA) – that builds on the the existing individual, collective and multi-employer collective agreements that the ERA currently provides for.

An industry union or employer will be able to apply to a Workplace Commission for an Industry Standard Agreement. The Commission would determine the “norm” of the standards already applying in collective agreements in the industry and “extend” those to all those workplaces in the industry where there is no collective agreement.

Employers and unions will still be able to negotiate collective agreements for their enterprise as an alternative to the Industry Standard Agreement. Individual Agreements can still apply, but cannot be less than the Industry Standard. Workers will not have to join unions to be part of an Industry Standard Agreement, but unions will have access to workers in the industry to talk about the standards and other rights, as they do now.

This model of “extension” is widely used in successful economies and the adaptations in Labour’s policy will continue to enable unions and employers to bargain directly with each other when that is the most effective approach. It’s nowhere near the centralised wage fixing approach of Australia.

Industry Standard Agreements are about improving the pay of New Zealand workers. It is part of the wider structural change that needs to occur in the New Zealand economy. Labour has already signalled other changes such as tax, monetary policy, research and development and our yet to be announced savings policy.

There’s a lot more detail to our work and wages policy,  but that will have to wait for further posts.