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Future of Work or Stuck in the Past?

Labour’s new employment relations policy is well intentioned, but not fit for the future of work that the Party has spent so much time thinking of. Instead its recommendations interfere in how businesses are run, potentially fatally. At the Opportunities Party (TOP) we are also upset about how modest income folk are not sharing sufficiently in the fruits of national prosperity, but rather than take to workplace relations with a wrecking ball we want to focus on the fundamentals that impact people’s lives: housing, immigration, investment, tax, and fixing our broken welfare system. 

Most critically, in terms of the wage rates people are paid, we wish to remove the downward influence that comes from allowing hordes of low skilled immigrants to enter New Zealand. Instead, we want to see those businesses that are running out of labour start paying people more to attract staff. The most profitable firms will be able to afford this, the least profitable firms will either have to improve their act or fade away. This is good, these are the natural forces of bog-basic market capitalism at work. Creative destruction of unprofitable businesses and flourishing of the incomes of the owners and employees of successful businesses is just what we want.

Labour’s Plan – not quite with it

Labour are pointing out the problems that we all see – rising child poverty and families struggling to keep up with the cost of living, especially housing. Not enough of the benefits of economic growth are going to those on the lowest incomes. In other words, trickle down has failed. We couldn’t agree more.

Labour’s plan to solve this problem involves 4 key planks:

  • An increase in the minimum wage to $16.50;

  • Offering core public sector employees a ‘living wage’;

  • Placing conditions around the 90 day trials; and

  • Making ‘Fair Pay Agreements’ by sector – similar to the 1970s approach of national awards.

The first three changes are pretty minor. The minimum wage has increased by 50c per year for the past few years and is currently $15.75 or 67% of the median wage. That’s very high by international comparisons (as a percentage of both mean and median wage) if Labour keep pushing then there is always a downside – not just a higher bill for workplaces but also the risk of lower employment, particularly for young people.

Labour are also offering a living wage that offer is very selective – it’s only to a small number of ‘core public service’ workers; probably compromising their generosity here in an effort to avoid a cost blowout.

The idea that has really attracted the ire of employers is the last one – Fair Pay Agreements. And rightly so, given Labour’s own acknowledgement of how precarious the Future of Work is.

Fair Pay Agreements

These seem very similar to the system of national awards in the 1970s. There the terms and conditions of different businesses in an industry were set by a national agreement. On the one hand it was a hugely cumbersome system, and on the other they were easy to fiddle.

National awards worked where businesses in an industry are all structured the same (like hospitals and schools), but what if two businesses in the same industry work in completely different ways? They might not even employ the same kinds of people, but they might achieve the same outcome. This is a massive barrier to innovation, doing things differently and remaining competitive. Just look at Team New Zealand – where would they be if they had to employ grinders instead of cyclists?

The national awards approach is still open to manipulation by the bad employers that Labour is worried about. Assuming there is a performance pay system, if a business wants to suppress wages they will simply promote people more slowly.

The final point is how does is this work in a modern economy where workers demand greater flexibility in terms and conditions? Short answer is that it doesn’t. This would be a total anathema to young people who are quite used to negotiating an agreement that works for them. And as long as they get the job done, why would any sane employer be worried about that? The world is changing and Labour needs to shed its 1970’s-type ideas for ones that ensure wage rises aren’t offset by job losses, that businesses cannot thrive because of the rigidity of legacy labour market restrictions.

How should the problem be fixed?

There are a number of other things that The Opportunities Party would do to improve the lot of New Zealand’s wage earners. First off our tax policy would stop speculation in housing, making it more affordable over time and in particular taking pressure off rents. It would also drive increased investment in businesses, which means more, better paid jobs. We’ve already announced that we would restrict low skilled immigration, so we remove the brake on wage rates for New Zealanders rising.

Longer term we also support an Unconditional Basic Income, which will improve the lot of workers because they retain this as they move in and out of work. We want targeted welfare wound back in prominence, particularly the most demeaning aspects of witchhunt welfare. These policy advances are the only real way to insulate people from the realities of the future workplace. 

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    • Kevin FitzGerald
      commented 2017-07-06 17:13:31 +1200
      Any move to strengthen the bargaining power of workers is likely to lead to higher wages. Simply giving unions more power is also going to help. The market always works for those with power. It’s never free. Notice that the public sector, nurses and teachers are all unionised and all do better than individuals out on their own. TOP’s policies seem a bit selective. Controls on farming and the environment but not on employers? Where is the logic? Wage earners always do better when they have real bargaining power. The main thing wrong with Labour in this respect is their utter timidity. Unfortunately votes are for parties not policies. Some policies are deal breakers. Sadly, for me, I am with Jenny.
    • Jenny Whyte
      commented 2017-07-05 15:34:28 +1200
      Good to see you’ve finally come out and said you don’t support unions or collective bargaining. That’s all I needed to know. Lost my vote right there.
    • Christopher Jones
      commented 2017-07-04 10:40:24 +1200
      Beyond the workforce there are many decisions to be made about the future of work, innovation and recreation.
      Within the workforce however there would be no need for basic income regulation if we lived in a society where incomes were not harboured in secrecy nor money raised beyond its role as a tool.
      Transparency is the key to bringing fairness across all areas of the workforce and society in general. If knowledge of everybody’s income was publicly available, each person would know how their job was valued. There would be no manipulation by cagey employers and workers would support the goals of a management they could believe in.
      Similar successes can be seen in co-operative businesses where everyone is in a profit sharing role. Transparency works as a default co-operative in that all feel valued, or could argue openly for that value with their comparative knowledge.
      Individually, income transparency would cut much overspending and debt because there’d be no need to try and keep up with the Morgans to impress others. Rather if someone was pushing their debt limits they’d lose social credibility.
      Because most members of a society are compassionate, those that couldn’t afford to feed or clothe children for instance, would find themselves readily helped by better-off others.
      There would be difficulties in achieving such transparency. Arguments will be made about competitive advantages and egos will rebel. However if we recognise we are all here for a short time to make our lives and those around us truly better, we ought to be willing to step beyond the laws of the jungle for an openness that benefits all.
    • Stuart Munro
      commented 2017-07-04 03:13:38 +1200
      You haven’t really proposed a joined-up alternative to Labour’s policies, which makes your criticism rather disingenuous. Having stated that you prefer to ally with National however, your policies would be neither here nor there – full stream low-wage immigration and housing speculation with TOP in the passive role of the Maori Party would be National’s plan. Insofar as the looting of the wreckage of NZ’s public sector can be called a plan.
    • Josie Amon
      commented 2017-07-03 18:11:35 +1200
      I totally agree with the Unversal Basic Income. I work in software development and love what I do. I will always work because there are so many challenges out there.bunfotunately it is technology that has killed jobs for others and will continue to do so. People have the right to dignity and not be ground down by WINZ. And WINZvstaff should be among the first to go on the UBI because we won’t need them and their soul destroying attitudes anymore. Think of the artists, musicians, YouTube video makers, podcasters, local event organisers,, charity fund raisers, entrepreneursz hobbyists, students, artisans and volunteer workers that this would encourage! Capitalism would provide basic housing and other needs at affordable cost for people solely reliant on this income because they know that it is a guaranteed income and not likely to be suddenly cut off on the whimbof WINZ. Students would know what they need to budget with for university and not be dependent on horendous loans and/or the largesse of parents. Everyone would have the time and opportunity to learn anything they wanted without the worry that they would not be able to make a $ from it. Some people would choose to teach for free while others could create new teaching jobs for themselves with this new student base.
      Many people would be a lot happier living more simply and having something truly rewarding to do with their time. And employers would need to offer better work conditions and a happier work place environment to compete for workers. I still think we would find people to do the more unpleasant jobs – either because pay for these jobs would have to go up or by people on UBI doing these jobs from time to time to supplement their income when needed – not full time for little pay for all their working lives. No one should live like that.
    • Bob Beechey
      commented 2017-07-03 16:03:23 +1200
      “Young people negotiating an agreement that works for them” — Yes, if the employee has the smarts and wriggle room to do this (most low paid workers will not) and it is great from the employers point of view because a worker will be unaware that he is earning less than someone else doing exactly the same work. National awards are a fixed cost for employers that they can only reduce by shedding workers and capability rather than squeezing wages.
    • Michael Noone
      commented 2017-07-03 12:55:22 +1200
      Hi Geoff…how do you see the aged care workers agreement recently struck that sets a higher base that the minimum wage …This was settled to avoid the courts making a decision on the lack of parity to similarly skilled workers (male predominate) in other industries.. . It’s cumbersome to have awards dictate rates of pay… but is it the realistic way of protecting our workforce? Your solution seems to rely on a 3 or 4 prong approach which I believe in…but by defintion has more.points of failure.. Awards work in Oz…and the aged care fair pay agreement works in NZ in 2017.. Without it, the people in aged care…. resident and worker would be the poorer for it
    • Jaimini Hatchard
      commented 2017-07-03 12:50:28 +1200
      You’re right that labour’s policies are limited but you would be on the wrong side of the research to suppose that a 16.50 minimum wage would decrease employment. At that level it hasn’t even reached a living wage and still requires government subsidies for people to manage. If we want to waste our attention on criticising other parties policies over promoting our own could we please focus on truely bad policies(potentially the fair pay policy), not too little too late policies like an increased minimum wage which if anything is not enough of an increase.(a universal income could allow lower minimum wages but we have no universal income as yet so within today’s framework critising a needed boost to low wage workers is not a position many of the TOP supporters I know would be happy taking)
    • Oliver Krollmann
      followed this page 2017-07-03 12:29:14 +1200