What happens with wages and incomes is a measure of the fairness with which the economy is managed.
Political parties routinely pledge to improve prosperity.
You know when the National Government came to power in 2008, it declared that one of its primary objectives was to close the widening wage gap between Australia and New Zealand.
Actually in nine years the opposite has occurred. When National came to power in November 2008, the gap was $122 a week. By December 2016 it was $185 – that’s a 51% increase in disparity. So it is just getting worse. They were never serious about it.
For the Labour Party, the reason we pledge to improve prosperity is so it can be shared. But the truth is, the prosperity that has been generated isn’t being shared in New Zealand.
We live in an increasingly divided society where the gap between the rich and the poor continues to grow. One of New Zealand’s boasts to the world right now is we have one of the fastest growing levels of inequality as confirmed in the UNICEF report just a few weeks ago.
After nine years of National, working people’s share of the economy is falling. Less than 40% of economic growth under National has gone to working people through higher pay. Workers’ shrinking slice of the economy under nine years of National has effectively taken $23 billion out of pay packets over that time.
When 40% of children in poverty live in a working household, there is clearly a problem with our wages. When 67% - two-thirds - of workers received a pay increase of less than inflation last year, despite the economy growing, there’s a problem with how workers are sharing in economic prosperity.
Under the current Government, the problem is just set to continue. They said this in their Budget just a few weeks ago. The Budget forecasts no real growth in the average wage in 2017 or in two of the next four years. They are planning on economic growth but not sharing it.
And you don’t have to look far to see the impact of this unfairness on the lives of ordinary people.
At the end of the last year, a truck driver I met shared his story with me. How he’s working longer and harder just to get by and how he hasn’t had an increase in his pay rate in six years.
Then there’s the young teacher I met at the Lions game last weekend. He and his partner are teachers and earn good salaries but they have come to accept that now they have no chance of ever owning their own home in Auckland with the rent they have to pay and the amount they have to pay for a deposit. Now, one in five New Zealanders pay half their weekly income either in rent or towards a mortgage.
This just isn’t right. It isn’t fair. We need a fresh approach to the economy, and we need balance in the law that governs employment relationships and the negotiation of wages and conditions.
We have an economy that is too much driven not by improving productivity and innovation but by competition on wages and diminished employment conditions.
For too many New Zealanders, pay rates are too low. That is why it was so encouraging recently to see the settlement for Kristine and her colleagues in the homecare and aged-care sector. It was a long overdue pay rise. But it shouldn’t take four years of court action to get it with the government opposing it every step of the way until they ran out of steps. And there are many other low paid workers who deserve better pay, whether for pay equity reasons or just because there are too many people on pay rates that are too low.
Good employment law should enable employees to be fairly rewarded for their work, ensure fair treatment and should encourage employment relationships based on good quality management and good quality engagement.
There needs to be that balance.
The very need for employment law at all comes about because of what we call the inherent imbalance of power in the employment relationship. I think the words are actually still in the Employment Relations Act. But what does it mean? It is important to consider its meaning.
That inherent imbalance stems from the common law obligations on workers: the duty to obey, the duty of fidelity to the employer, amongst other things. It is a contract under which the worker submits to the authority of the employer. But those duties do not remove the basic human rights of the worker. The right to be treated fairly and with dignity, to have a voice at work, and the right to form or join a union and to get the benefit of belonging to a union such as your union delegate visiting you at work.
It is the human rights side of employment law that employment law statutes typically have to protect. That’s why what happens under our employment legislation is so important.
When the law is fair and affords balance to both sides of the employment relationship, it ought to give confidence to both to create workplace cultures that are respectful, that support engagement and are rewarding and satisfying for everyone.
If our statutes allow exploitative practices, we can hardly be surprised when exploitative practices actually happen.
You take what is happening with Wellington bus drivers right now as an example.
The Wellington Regional Council has re-let the tender for bus services in Wellington. They have awarded or decided a preference now to give the contract to a new bus company. The new company doesn’t have the buses to run the services yet. They don’t have the bus drivers yet either. It is assuming drivers from the existing bus company will take up jobs with the new company.
But the new company isn’t offering the same terms and conditions of employment. The new company plans to reduce the cost of the payroll for the drivers. The drivers haven’t had a say in this. There’s been no negotiation with them. The only negotiation has been between the Regional Council and the bus company who wants to deliver these services. As it turns out the bus company agreed to a lower price for its bid. And it wants the drivers to pay the cost of the shortfall with lower incomes.
This story of using contracting to reduce incomes is far from uncommon.
There’s no justification for reducing the price of labour when the nature and scope of the work remains unchanged and the skill level is the same. We simply should not allow it and we won’t.
Productivity gains are not achieved by raiding workers’ pay packets. They are achieved through good management and good technology. This is what good employment law must promote.
I want to acknowledge E Tū and its proud record of standing up for workers. You’ve secured settlements for disability support workers, got guaranteed hours for home support workers, got a living wage for security guards and Wellington Council’s cleaners, you’ve got $20M in back pay for Tiwai Point workers and negotiated a benchmark employment agreement with New Zealand King Salmon.
Last year 830 collective agreements were renewed. E Tū’s average pay rise was 2% while the national average pay rise was 1.3%. Significantly, remember that last year 45% of New Zealand workers got no increase at all.
And E Tū (and before it the Services and Food Workers Union) was one of the unions backing Kristine Bartlett through the multiple court cases and various appeals, to secure a $2 billion pay equity settlement that will transform the lives of aged-care workers.
It was of course galling that while the Government has taken great credit for the settlement and lorded itself as the hero for aged-care workers holding the settlement as proof of its commitment to fair pay and gender equality it is now fiercely resisting the extension of these provisions to other vulnerable workers. Our policy supports your campaign where the government has let you down.
To lift productivity and secure fair wages and a better quality of life for the many New Zealanders now struggling to get by, we need for a new and improved employment framework.
Labour believes that the New Zealand employment relations system must be able to ensure that workers are afforded core minimum employment standards and we have to stop the race to the bottom on wages and conditions.
We must correct the inherent imbalance of power between workers and employers. We have to also enable employers and workers with the capacity to engage with each other with confidence over new technologies and the new employment opportunities that technology brings.
1. Fair Pay Agreements
Labour realises that good employers share a commitment to strong employment standards and often face unfair competitive pressure from those employers who seek to employ workers just at the cheapest price.
This penalises businesses with good pay and conditions and it encourages the race to the bottom.
That’s why we’re going to work with unions and with businesses to develop and introduce a system of Fair Pay Agreements that will set minimum conditions on pay and conditions for workers across an industry.
The concept of that Fair Pay Agreement is similar to the recent care and support workers settlement. Actually everybody came together, worked it out together, and did a deal.
Different businesses can provide better pay and conditions if they wish, but there will be a set of minimum standards in each industry.
It will also help close the widening wage gap between New Zealand and Australia.
2. Living Wage
Fair Pay Agreements will help ensure New Zealand workers get their fair share of our economic growth.
But there is an urgent need to take action on low pay in particular.
Labour supports the Living Wage campaign for a simple reason: every working person deserves to live in dignity and to raise their family at a standard that allows them to participate in their community. That’s what a living wage is.
In our first 12 months in office, Labour will ensure all core public sector employees are paid the Living Wage.
From there, we will work with organisations that have regular and ongoing service contracts with the core public service to make sure that they are Living Wage employers too.
We envisage the lowest-paid workers such as cleaners, catering staff and security guards will make significant moves towards the living wage by the end of our first term of Government.
In addition to this we will increase the minimum wage year on year, as Labour has always done in Government, starting with an immediate increase to $16.50 in our first 100 days and working towards a long term goal of two-thirds of the average wage.
3. Trial Periods
I want to talk briefly about our plans for National’s ‘fire at will’ law or trial periods, which removed virtually all rights to a worker dismissed unfairly during their first 90 days.
Labour will replace that law with a balanced law that restores fairness.
In a modern, civilised system of employment law, there is never a case for eliminating basic fairness rights. That’s what National’s law does.
Over the last two years, I’ve spoken to dozens of small employers about that issue and they tell me two things:
They strive to treat employees on trial fairly by giving feedback and believe that is the right thing to do. When I tell them we will make that a legal requirement they say no problem that is what we already do;
They fear long, drawn-out grievance procedures for someone employed for a short time and who didn’t work out.
We need to get the balance right.
If a worker on a trial period is treated unfairly, they must have redress.
An employer who has done everything right should not be up for a legal fight that, even if they win, will cost them.
Labour’s replacement law restores fairness. It will do three things primarily:
Ensure employers are able to take workers on a trial basis.
Require the employer to provide feedback during the trial so the employee has a clear picture about how they are doing.
Put in place a fast, fair, simple referee system for resolving disputes. Claims will be dealt with within three weeks. There will be no cost to the parties and no lawyers will be allowed. And the referee’s decisions will be final.
We live in an era of unprecedented change. That’s why one of my first undertakings as leader of the Labour Party was to launch our Future of Work Commission.
The future is about embracing and preparing for technological and social change.
To be a successful society our prosperity must be shared. We need to invest in our young people and support people through the transitions that lie ahead.
We need to be flexible enough to deal with the changes and shocks that are coming our way. We need to lead change and harness the talents of all so that our economy delivers a share in prosperity for all citizens.
After nine years we need a fresh approach. We need a renewed social partnership between an active and capable government and a business sector focused on innovation and inclusion.
We need a new approach to employment relations that is fair, practical, pragmatic, and inclusive. That’s what Labour will deliver.
One in which employers and employees have the confidence to face their future together.
Getting our employment law right is vital. Restoring fairness, respecting rights and the dignity of work, embracing opportunity and sharing prosperity – these are the measures of a functioning labour market and good employment law in the 21st century.
With Labour, that’s what we’ll achieve.
Thank you for being here.