jacinda ardern

Former New Zealand Prime Minister Jim Bolger introduced one of the world’s most extreme examples of anti-union legislation. Now he is a strong advocate for the rejuvenation of the union movement.

The signature policy of Jim Bolger’s National Party government of the early 1990s was the Employment Contracts Act (ECA). It “ranks as one of the most extreme examples of anti-union legislation in post-war history” wrote New Zealand media commentator Chris Trotter.

The ECA, introduced in 1991, decentralised the wages system, replaced awards with individual contracts and ended compulsory unionism. Even the word “union” was excluded from the legislation.

Within four years of its introduction, union membership in New Zealand had fallen from 46 per cent to 21 per cent.

Twenty-eight years later New Zealand unions are still struggling, 
especially in the private sector. Here, union density was just under 50 per cent in 1990. It was less than 10 per cent in 2017.

So, for many New Zealanders it was no small shock for Bolger to declare in an interview in 2017 that the neoliberal policies he championed had failed and that unions were too small and deserved to have a greater influence and a stronger voice.

Several months later, Labor Prime Minister Jacinda Ardern put Bolger in charge of a committee to design a new wages system.

Bolger and his union, employer and academic committee members delivered their report in late January this year.

“We believe we have designed a Fair Pay Agreements system which, will be most useful in sectors or occupations where competition is driving a ‘race to the bottom’ in terms of wages and conditions,” Bolger said.

The report found that:

• one in four NZ wage-earners earns less than $NZ20 an hour –when the average wage is $31.63
• these workers are disproportionately young, women, Māori or Pasifika, or part-timers
• as of 2016, just 15.9 per cent of New Zealand employees were covered by collective agreements, half the OECD average.

The committee pointed out that New Zealand’s industrial bargaining system badly failed to meet global benchmarks.

“The OECD recommends a model of combined sector and enterprise level collective bargaining, because it is associated with higher employment, lower unemployment, a better integration of vulnerable groups and less wage inequality than fully decentralised systems like ours,” the working group said.

The Minister for Workplace Relations and Safety, Iain Lees-Galloway, welcomed the report and said it “outlines the challenges in making policy changes around fair pay. New Zealand is out of step with the OECD both in terms of income inequality and productivity”.

The Bolger committee’s model would “facilitate conversations not only about fair wage rates but about training pathways and opportunities to increase productivity and profit”.

Bolger counselled the National Party he once led to respond to the report with “calmness and just say there are issues raised here that we as a party in Parliament need to reflect on”.

“The most disappointing [outcome] would be if they were to dismiss it [the report] as of no consequence.

“My old party has to accept, as they do, that the world is changing and we have to change to keep ahead.”

NZ moves towards industry bargaining

The New Zealand government’s fair pay working group delivered 46 recommendations, which it says it will help see an end of the “race to the bottom” when it comes to wages. It recommended that:

• Fair Pay Agreements set minimum standards across an industry or occupation
• workers may initiate a Fair Pay Agreement if they meet a minimum threshold of 1000 people or 10 per cent of workers in the sector or occupation, whichever is lower
• employees cannot be employed on individual contracts except in a few, temporary circumstances
• workers, whether union members or not, should be represented by unions and employers may be represented by employer organisations
• costs for bargaining should be met by government, a levy or bargaining fees.