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Lessons from New Zealand

New Zealand Prime Minister Jacinda Ardern’s visit to Europe this week provides a timely opportunity to look at how the new Kiwi government is changing its approach to workers.

Despite growing evidence about the importance of social partnership in raising productivity and living standards, there are few examples of governments actively looking to engage unions in new ways.

The latest OECD Jobs Strategy (https://read.oecd-ilibrary.org/social-issues-migration-health/good-jobs-for-all-in-a-changing-world-of-work_9789264308817-en#page1) published last year, makes the case that stronger unions are associated with better workplace conditions, productivity gains and lower pay inequality. Yet OECD figures also show that the number of workers covered by a collective agreement fell from 45% in 1985 to 33% in 2017.

Bucking the trend                                                              

Against this backdrop, New Zealand stands out on the world stage as a government proactively looking to extend employment rights.

Despite being a minority administration, the Labour government has already made significant progress on reforming its employment framework and establishing new approaches for a rapidly changing world of work.

Why does this matter? The active involvement of government in helping the economy adapt is important for a number of reasons.

Firstly, as in the UK, New Zealand union membership was halved during the 1980s and 1990s. Encouraged by deregulation and hostile governments, both employment rights and labour market institutions were run down.

That has led to a missing maturity in the economy. While unions remain a key economic player there is a lack of employer groups (as opposed to business lobby groups) for government to engage with. Collective bargaining requires building up knowledge, skills and institutions that encourage and support negotiation and partnership.

Secondly, the world is not standing still. Technology, economies, concepts of work and how businesses operate are changing rapidly. Successful economies will be ones that can bring partners together to manage these changes and give workers a voice.

The OECD Jobs Strategy puts it this way: governments should “put in place a legal framework that promotes social dialogue in large and small firms alike and allows labour relations to adapt to emerging challenges.”

Reforming the framework for employment relations

The New Zealand government has already signalled its intention to radically reform the balance of employment rights. It has announced an impressive set of reforms to renew collective bargaining, introduce fair pay agreements and extend employment rights to freelance and contract workers.

It is a legislative agenda that could transform employment rights and set out a new bargain for social partnership in the economy. And in today’s world characterised by uncertainty, Brexit and the rise of right-wing populism, there are not many case studies of this type.  The New Zealand government provides a good summary of its reforms online via this link: https://www.mbie.govt.nz/business-and-employment/employment-and-skills/employment-legislation-reviews/

I have also been impressed by the government’s commitment to create sustainable change and to ensure that the reforms bring social partners together. Whilst this may mean negotiating on some elements of its agenda, it also means change is likely to be more durable.

For example, in an endeavour to forge a national consensus on the reforms, the government appointed the former National Party prime minister, Jim Bolger, to chair its working group exploring a system for industry or occupation level bargaining.  Party politics hasn’t gone away, but it does feel like a fresh approach after years of one-party dominance.

The result is legislative proposals that:

  • provide greater protection for workers
  • reinforce a social partnership approach to industry standards
  • create fair rules for unions in negotiating with employers

Union responses

I was lucky enough to spend nearly a month with union colleagues in New Zealand last Autumn to see these changes at first hand and take part in discussions with government.

Unions themselves are also responding to this new environment by embracing new organising approaches, working with engaged businesses and taking on bad employers – as unions always should.

Major successes have included ground-breaking campaigns around gender pay discrimination and fairer pay deals for workers in public services after long-term austerity from the previous national regime.

The Public Services Association, New Zealand’s largest union, last year voted to extend its membership to freelancers and contractors working in public and community services. This sounds like a small change, but it represents important recognition of how work is changing.

At the PSA’s Congress, a union member asked the Workplace Relations Minister Iain Lees-Galloway how workers could improve their lot. His reply was: ”Join a union”.

To hear a minister talk about prosperity as a shared endeavour between business, workers and government is in stark contrast to the ongoing Brexit melodrama and the Westminster government’s piecemeal approach to industrial strategy.

Major Motion Picture Agreement

One of the topics covered during my visit was the Major Motion Picture Agreement signed by Prospect’s media and entertainment sector, BECTU.

A few months ago, the NZ government-convened Film Industry Working Group published its recommendations to allow contractors in New Zealand’s film industry to bargain collectively – a right taken away by the previous National Government in the so-called Hobbit Law.  The government is now considering the recommendations.

In many ways, the deal would be similar to BECTU’s Major Motion Picture Agreement. The key difference is that contractors’ rights in New Zealand would be backed in law.

Union innovations

Changes like this don’t come about by accident. After years of struggling against a difficult economic and political environment, Kiwi unions started to innovate by looking to new workers, organising ideas and campaigning techniques to increase their influence and reach.

Operating in the tough market of retail and logistics, First Union invested heavily in ground organisers to reach new members.

The teaching unions are investing in new online software to create communities of interests across the education sector in order to bring members together.

And, the New Zealand Council of Trade Unions is focused on a high productivity, high engagement model to put workers at the centre of a new economic model for growth and shared prosperity.

Early results suggest that investment in innovation, and the new government’s approach, is helping unions to reach new workers with union density increasing from 18.2% to just over 19% over the past year, according to the latest NZ Household Labour Force Survey. A change driven mainly by an increase in women joining unions.

With the backdrop of Brexit colouring all of our political decisions in the UK, let’s look to the day when a government realises that involving workers is key to growth and prosperity.