THE PRESS THURSDAY, MAY 26, 1983. Back to court wage-fixing?

Press, 26 May 1983, Page 14

THE PRESS THURSDAY, MAY 26, 1983. Back to court wage-fixing?

The Minister of Labour, Mr Bolger, probably sought to do no more than sow the seeds of debate when he suggested that an altered Court of Arbitration could play a role in centralised wage-fixing once the freeze on prices and incomes is over. He said that Australia’s return to a system of centralised wage-fixing under its industrial commission — a result of the economic summit called by the Australian Prime Minister, Mr Hawke — would prompt many to consider whether New Zealand should follow suit. If New Zealand were to do so, and if the Court of Arbitration were to be the vehicle, Mr Bolger said, the court should be increased from three to four members and it should be required to deliver unanimous decisions.

Although the Prime Minister, Mr Muldoon, has ruled out an immediate return to free wage bargaining when the freeze begins to thaw next February, nothing in his remarks or in those of Mr Bolger suggests that the Government is set on a return to centralised wage-fixing. Some people might argue that the Government has taken that role to itself already, without the benefit of a Court of Arbitration. Mr Bolger’s remarks can be read as a desire by the Government to distance itself from the need it has felt recently to play such a direct role in the determination of wages and allowances. Under Mr Bolger’s proposal, the Government’s influence on such matters would still be strong; but a court would be the forum, not the Cabinet room.

Neither the employers nor the unions are likely to view centralised wage-fixing with much enthusiasm. Unions generally have been reluctant to use the Court of Arbitration as an arbitrator on wages except for General Wage Orders. The Employers’ Federation favours decentralised wage fixing. It is wary of problems associated with a centralised system in the past.. These include difficulties with margins, such as those for skill, and with coping with the differences between industries that might employ members of the same union, but have different rates of productivity and growth and so differ in their ability to pay. In the past, centralised systems have led to a mesh of relativities between awards. This mesh has been a potent cause of inflation. The unions and employers would prefer to negotiate in the first instance, leaving arbitration as a last resort. The concept on which they have been working, and which has

been a point of discussion at the tripartite talks between the Government, the employers, and the Federation of Labour, is for a consensus to be reached between these three at the beginning of each wage round on the limits for bargaining and allowing negotiation of wage movements within those limits. If the Court of Arbitration is to become the vehicle for centralised wage-fixing, Mr Bolger’s suggestions to expand it and to require unanimous decisions from it need more elaboration. The single biggest factor in the ability of the court to function in this role is the respect and standing it holds in the eyes of those who must use it. Until 1968, the court was accepted by both parties; the nil General Wage Order of that year damaged the court’s effectiveness from then on.

The judges who preside over the court are assisted by two nominees, one each from the Employers’ Federation and the Federation of Labour. Mr Bolger proposes that a rejigged court would include someone not identified with the employers or the unions. Such a person would have, however, special expertise in wider economic matters, “similar to the Secretary of the Treasury.” Presumably, the additional member of the court would be a Government nominee, though Mr Bolger has not made this clear. To a great many people this would make the court no more than an extended arm of the Government, diminishing rather than enhancing the court’s stature. Because of the requirement for a unanimous decision, the suspicion would always linger, unfounded though it might be, that the Government could exercise complete control over the court through its nominee.

A power of veto, such as the requirement for a unanimous decision would give to every member of the court, could well frustrate the purpose of a centralised wage-fixing body altogether. A court that could be tied in knots by a filibuster, from whatever source, would engender little confidence and, at worst, could itself be a source of industrial strife. Mr Bolger might have something in mind that would remove these shortcomings. The outline he has given so far is sketchy. More deliberation will be needed before New Zealand adopts a system that is intended to play such a large role in industrial affairs. The proposals are a likely topic at the next session of wage-fixing talks. In the meantime, Mr Bolger has provided food for thought.