Q: What is a Fair Pay Agreement?
Fair Pay Agreements represent a new way of bargaining in New Zealand, especially how it can bring a whole industry to the table to set minimum standards. A Fair Pay Agreement is an industry or occupation-wide collective agreement.
This would set a floor for terms and conditions across all employees in a specific industry or occupation. Similar frameworks already exist in Australia (called “modern awards”) and Europe.
Workers and employers know their sector best. By working together through effective engagement and bargaining cooperatively, workers and employers can set standards that are relevant to their sector and support productivity and growth
Q: Why do we need Fair Pay Agreements?
Our labour market is a mixed success: employment is growing steadily and the labour participation rate is as high as it has ever been. However, wage growth is not evenly spread across society, and our per capita productivity is low.
Fair Pay Agreements could address labour market issues by helping to lift industries out of low wage, low productivity cycles. They could also address the growing gap between wage growth and productivity growth in New Zealand.
Q: What do the law changes around Fair Pay Agreements mean for employers / businesses?
Preventing a race to the bottom on wages encourages businesses to compete on the basis of innovation, customer service and increasing efficiencies. These incentives are intended to lift business productivity.
Fair Pay Agreements may increase firms’ and workers’ incentives to invest in physical and human capital, which may help lift industries out of a low-wage, low-productivity cycle.
Q: What do the law changes around Fair Pay Agreements mean for workers?
Better and fairer wages are an outcome that we aim for. Fair Pay Agreements will establish a framework for employers and employees to work together constructively to lift wages and productivity.
While wages have generally grown in the top-two and bottom-two deciles, wages for middle New Zealand have not kept up and as a result feel squeezed by rising costs, particularly in housing.
Some occupations or industries, because of the way they currently are organised, suppress the price of labour. This can lead to a race to the bottom, where firms compete by reducing or stagnating wages or other conditions of employment as costs of living increase.
Q: Why was Jim Bolger chosen to lead the Fair Pay Agreement team?
My aim is for an enduring framework that crossed the political divide, and brings the voices of workers and business together.
Jim Bolger’s experience as a Prime Minister of the first MMP Government and former Minister of Labour, alongside the enormous respect he has across New Zealand, made him an ideal choice to lead this work.
Q: What changes do you think need to happen in New Zealand’s workforce?
The Government has a vision for a highly skilled and innovative economy that delivers good jobs, decent work conditions and fair wages, while supporting economic growth and productivity.
We must ensure that workers and businesses benefit from economic growth, and the best opportunity we have for a lasting and productive industrial relations environment is to work together collaboratively and collegially.
Q: What else has this Government got planned for Workplace Relations and Safety?
Our Government was elected with a mandate to foster an inclusive, progressive and modern society. We’re well underway on our programme to restore the balance between workers and business, which was steadily eroded under the previous Government.
We’ve introduced legislation that strikes a good balance for the modern workplace, provides better protections for workers and lifts conditions especially for low-income New Zealanders, and we’re implementing our changes with business firmly at the table.
I’m particularly interested in how we modernise our industrial relations framework to make it fit for contemporary working arrangements, and work on a new Health and Safety strategy, protections for contractors, replacing the out-of-date Holidays Act and encouraging High Performance High Engagement in workplaces is continuing apace.
Q: What has this Government already achieved Workplace Relations and Safety? What are you most proud of?
I’m far more interested in the work ahead, and continuing our important work in collaboration with business and workers, but I was pretty chuffed to introduce the first legislation for the new Labour-led Government to extend Paid Parental Leave.
This is a great step forward for our families. Labour campaigned on giving children the best start in life, and we made good on our pledge to extend paid parental leave to 26 weeks in the first day of the 52nd Parliament.
I’m also really pleased to have announced the Government’s work on a wide-ranging Health and Safety strategy. While New Zealand has made good progress in recent years in reducing the rate of acute harm, urgent work still remains. I believe that we can be among world leaders for healthy and safe workplaces.
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