Reform of industrial relations

Press, 19 April 1986, Page 18

Reform of industrial relations

By

Patricia Herbert

in Wellington

The discussion of the Government’s Green Paper industrial relations review is based on interviews conducted over a two-month period. Among those interviewed were: Mr Alf Kirk; economic adviser to the Prime Minister’s Department and a member of the officials committee involved in the reform exercise. Ms Margaret Wilson; the President of the Labour Party and an industrial relations lecturer. Mr Rob Campbell; a member of the Labour Party’s policy council and of the Federation of Labour executive. Mr Steve Marshall; the director of advocacy for the Employers Federation. Mr Peter Carroll; a senior Employers Federation advocate.

Compulsory unionism is protected in the Government’s review of industrial relations. The national award system is not, but Labour politics will probably ensure its survival, at least in thef short-term.

The unions have already de-, clared the award system “off limits” and indications are that they will be able to rally enough support in the right places to make good their word. Mr Rob Campbell made an oblique reference to this in a recent magazine interview when he conceded the defeats sustained on the economic front as battles within the war, and looked forward to “having the numbers” to force the Finance Ministers to a compromise. “The prospect of a sort of gunfight at OK Corral with the unions against the rest is not attractive ... We need some allies, we need some disunity among other forces,” he said.

On this issue they will get just that, particularly as Labour’s 1984 election manifesto pledged not only to maintain the award structure, but also to strengthen the protection it gave vulnerable groups in the workforce. But it is not just “in-house” political pressure that will protect the award system; there is also the question of what would replace it. The main argument for a centralised system is that New Zeaaland is a nation of small employers. Of the estimated 700,000 people employed in the private sector, more than 200,000 are employed by firms with fewer than 10 employees. In many occupations, the difficulties this presents to effective enterprise bargaining are compounded by high staff turn-over — the restaurant trade being a prime example. Such workers might be protected by the State through a law fixing minimum wages and conditions, but there is resistance to this reliance on the Government as governments come and go, and as recent experience with the Statutory Minimum Wage has not inspired confidence. The wage had not been formally reviewed since 1973 when Labour took office in 1984, and stood at only $75 a week. It has since been more than doubled and is now $l7O a week. Another factor against radical reform is that the wage-fixing system was reformed only two

years ago when two important changes were introduced, neither of which has yet been fully exploited. The first was voluntary arbitration and the second the new productivity and ability-to-pay criteria given the court. Both would eventually produce a movement away from traditional relativity arguments — an object the employers are trying to pursue through the current review. Given these considerations, the Minister of Labour, Mr Rodger, seems reluctant to embark on further changes to the award bargaining structure just yet. In a key-note address to a seminar in Wellington on the Green Paper this month, he defended the present system against its critics by asking if it was really as inflexible as they claimed.

In the 1985-86 wage round, he said, there had been a wide dispersal of settlements — from 6 to 7 per cent to “well over 20 per cent.” He also conceded, however, that “a significant number” of awards had been settled in the narrow 15.5 to 16.5 range. Such a concession was necessary, but probably not sufficient acknowledgement of the fact that, when the metal trades document was settled at this rate, it immediately became the “going rate” because of the large number of awards linked to it through horizontal relativities.

Still, the Minister had a point. Those links represent a considerable obstacle to flexibility, but not an insuperable one. The meat industry said it could not afford to pay 15.5 and, at the price of a long strike, was able to buy the leverage to pay less — a little less to its tradesmen, and a lot less to its process workers. The lesson of this experience is that structural reform is not necessary to deliver the sorts of flexibilities the employers seek. And the obverse is also true; that the reforms they seek will not necessarily deliver change. Certainly, they will not alter the balance of power in particular negotiations; not immediately anyway, and not without a fight. It is a theme Mr Rodger returns to again and again. A recent speech: “Whatever decisions are taken, the reality is that unions will not be tamed or disappear and they will continue to pursue improvements for their members which

conflict with what the employer wants. “Equally, employers will need to be prepared to take it on the chin from time to time to get what they want. “The final outcome will, therefore, represent something of a compromise between wages and production costs, and its precise nature will probably have more to do with the underlying effectiveness of union and employer organisations than with what is contained in the law,” he said. The point is valid. It is not the structure in which a dispute is resolved which determines the result so much as the will each party brings to it. But Mr Rodger has promised repeatedly that the review will lead to “significant reforms” and, in doing so, has a tiger by the tail. Demand for change is intense, among the spokespeople for the business lobbies, and increasingly among their rank-and-file members. On a single day last month, for example, Mediacom — a press statement service — carried statements from three employers groups calling for reform. Clearly the Government will have to deliver, but the constraints on it are considerable. Not least this is because, if the reformed structure is to work, it will need a lafge measure of consent from the parties. The industrial relations system relices on respect because, without it, there is failure to comply with the rules and compliance cannot easily be enforced. The general consensus is therefore that change must be gradual, achieved through incentives rather than compulsion where possible, and delicatelydone; using the surgeon’s scalpel rather than the axe.

The decisions taken must also recognise the desires of each side to the debate without surrendering to either so that the end product acknowledges the employers’ demands for substantial reform as much as it acknowledges the unions’ attachment to national awards. Rhetoric aside, these positions are not mutually exclusive. Some options now being bandied about are;

© A tidying up of second tier negotiatons so that they are conducted on an industry basis. This would entail, for exmaple. New Zealand’s heavy engineering companies being covered by a single document rather than a plethora of house agreements. It would probably be acceptable to the unions. The employers, although they want more, might accept it if provisions were put in place to guarantee that any agreement reached would have “sanctity” — that it would be honoured for its full term by both parties. @ The dislodging of workers covered by a secondary agreement from the award. This would allow the two systems to run side by side instead of one on top of the other, and would prevent the “leap-frogging” which now occurs as gains in one area are fed through to the other to create an upward pressure on wages.

The employers would welcome such an arrangement, but the unions would want their members to retain a primary relationship with the award. © Encouraging industry-based bargaining, either by allowing workers at a single work-place to set up their own union, or by introducing balloting procedures so that they can elect one of the unions represented there to act as their advocate.

In such circumstances, the workers would continue to pay dues to their own union and those unions would channel the funds through to the agent union on a pro rata basis. A compromise along these lines may be possible. Employers might also avoid dealing with a multiplicity of unions if the obstacles to union amalgamation were removed and replaced with incentives. This process would take time, but has the advantage of active union support '< Both sides recognise the need for reform although to different degrees, in different area% and often in conflicting directions. There is, however, the capacity for trade-offs.

More than anything else, the employers want stability and a system which will deliver a minimum of industrial disruption. The gains the unions want were spelled out by the secretary of the Federation of Labour, Mr Ken Douglas, in a speech this month. They include: • An extension of bargaining scope by eroding the concept of “management prerogative” to allow unions to negotiate of right such matters as: superannuation schemes, fringe benefits, staffing levels, new technology, investment, and company restructuring.

• Extended legislative protection for union rights of entry, for access to lists of workers, and for stop-work meetings. • Greater access to information on the profitability and activities of the employers’. The Prime Minister, Mr Lange, indicated recently that’ the' unions could expect to win. ground in these areas if they; were asked to concede it in others. He said:

“A wage-fixing system dating back to the 1890 s may be no more relevant today than the economic arrangements of the 19505, but the need for effective trade unions is as great as it has ever been ... Any and all reform of the labour market rests on that basis.” An incentive exists for the unions to make the sort of deal implied in these remarks. The National Party has adopted an, industrial relations policy which might have been written for it by • the Employers Federation. - One day, it must regain the * Treasury benches. If changes are made now, it might not see the need in Government to make . more.