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Letter written to Mr David Edwards of the Victorian Chamber of Commerce



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OFFICE OF THE MINISTER FOR INDUSTRIAL RELATIONS

PARLIAMENT HOUSE,

' CANBERRA, A.C.T. 2 6 0 0

Attached is a letter I have written to Mr David Edwards of the Victorian Chamber of Commerce.

I have released it publicly to draw attention to the extent of misinformation being circulated by Mr Edwards about the New Zealand Employment Contracts Act - and its impact on working people. Mr Edward's is again quoted in today's press arguing

that few employers in NZ have used the Act to slash wages.

The New Zealand road - with its exploitation and no coordinated strategy for upgrading skills and training - is not the way to a secure economic future for Victoria or Australia.

Peter Cook

COMMONWEALTH parliam entary library m ic a h

Telephone: (06) 277 7320 Facsimile: (06) 273 4115

MINISTER FOR INDUSTRIAL RELATIONS

PARLIAMENT HOUSE, CANBERRA, A C T. 2 6 0 0

30 June 1992

Mr David Edwards Chief Executive Officer Victorian Chamber of Commerce and Industry

449 Swanston Street Melbourne 3000

Dear Mr Edwards

I am writing to you in response to your article in the Herald Sun newspaper on 5 June on the New Zealand Employment Contracts Act.

I was most disappointed with the article. It contained a number of major inaccuracies. In addition, it sold Australia short as it did not in any way acknowledge the dramatic increase in the flexibility of the Australian industrial

relations system and the good use to which such flexibility has been put by hundreds of companies including Email/Simpson, Shell, ICI, Toyota, ASTA, Kimberly Clarke, ANZ and National Australia Bank just to name a few.

First let me detail the inaccuracies. You state that "while official statistics are not readily available there is substantial evidence that productivity has picked up, the 'jewel in the crown' being the waterfront where gains of 50% or more have been achieved". It is disingenuous to make such generalisations given that the Employment Contracts Act has only just had its first birthday and many employees are not yet covered by contracts. Where productivity has picked up,

this most commonly has occurred as a result of processes well underway long before the Act came into operation. For example, productivity gains in the waterfront - the alleged 'jewel in the crown' of the Employment Contracts Act - arise

from legislative changes brought about by the Labour Government in 1988. Moreover, the latest official productivity figures from the OECD on New Zealand indicate a fall of 0.9% in 1991.

You also stated that "the rights and interests of employees are extremely well protected by the (Employment Contracts) Act, reflecting the New Zealand Government's concern that employees are not to be exploited and abused. Apart from

MINISTER ASSISTING THE PRIME MINISTER FOR PUBLIC SERVICE MATTERS Telephone: (06) 277 7320 Facsimile: (06) 273 4115

legislation that establishes a minimum wage and holiday provisions, employees also have access to an employment tribunal or, if necessary, an employment court, to deal with personal grievances and arbitrary dismissals".

It is worthwhile examining the protections that the New Zealand legislation does offer employees: . a minimum wage for full-time adult workers of A$175 per week or A$9153 per annum (at current exchange rates)

. for employees under 20 years there is no minimum wage

. 3 weeks' holiday leave

. 1 weeks' special leave to cover sickness, domestic and bereavement leave (not cumulative from year to year).

. parental leave

. in concomitant social security changes, workers who • resign from unreasonable employers or who decline a job offering one cent more than the minimum wage can be disqualified from unemployment benefit for six months

. even if employees choose to be represented by unions in negotiations the employer can refuse to negotiate with the union and insist on dealing with employees individually.

Quite frankly no reasonable person could describe the above as adequate protection for vulnerable workers in weak bargaining positions. There is evidence that many workers, particularly younger workers and women workers in the small business

services sector have suffered significant pay cuts.

You say that the Employment Tribunal or Court will protect employees. Recent decisions of those institutions clearly demonstrate that this is not the case.

For example, they have legitimised what has been called the ' partial lockout' . What this means is that when a contract is being negotiated, the employer is only required to pay the terms and conditions he/she is offering to his/her workers ie.

any previous contract or award has no interim force once it has expired. An employer can wait for the relevant award to expire and then 'lock' employees out of certain employment conditions.

Another example concerns 159 Air New Zealand catering staff who were sacked in August 1991 because they would not accept pay cuts of up to 30 per cent. They were replaced with contractors. All 159 employees lodged a personal grievance

claim in the Employment Court. The Court has not yet made a decision in the case and recently the case was adjourned indefinitely because of the ill health of one of the judges. Meanwhile these workers were not able to get unemployment benefits for six months after being sacked because they

refused the job offer of working for 30 per cent less wages.

3

As I mentioned above I was also disappointed that you did not acknowledge the flexibility that is available to employers in the Australian industrial relations system. You started off your article with a quote from a New Zealand businessperson who was stating the flexibility of their system in relation to

penalty rates and working time arrangements. You are obviously not aware of the ANZ workplace agreement, recently ratified by the Australian Industrial Relations Commission, which has revolutionised working time arrangements in that bank. No restrictions are put upon the hours of work of a

full-time employee provided it not below 152 hours every four weeks. Arrangements are negotiated which suit both the employee and the branch manager.

A significant number of other Australian companies have also taken advantage of the flexibility in restructured awards or have used workplace bargaining to 'buy out' penalty rates and negotiate working hours suitable to their operations.

There are now no real barriers in the Australian system to prevent fundamental co-operative and equitable workplace reform. As the Managing Director of BMP, Mr John Prescott, stated in an address to the Liberal Party in Melbourne last year (9/8/91)

"The fact is that there are many, many opportunities for workplace reforms in our present system. If you are serious about lifting productivity, reforming work practices etc, you talk with the people involved and

identify the common interests that managers and employees have.

Now there is nothing in the present system that holds you back from doing that. On the contrary, there is encouragement and opportunity for those who are serious about making change."

Presumably your members see your role as promoting and assisting Victorian industry not as a publicist for their competitors in New Zealand. I hope that in the future you will present a better balanced and more accurate picture of both the Australian and New Zealand industrial relations

systems.

Peter Cook

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Is New Zealand’s Employment Contracts Act %modeI for Australia? Can our neighbor’s industrial reform? DAVID EDWARDS answers with a resoi A N E W Z e a l a n d

businessman and his X JL counterpart were dis­ cussing the performance of their businesses when the subject of penalty rates

cropped up. The New Zealander said: “I reduced them from double time at the weekend to time and a quarter, as well as

making any day an ordinary day of pay." The Victorian said: "Well. I've just contri­ buted to a fund to pay at least

S100.000 in legal expenses, just to have the same kinds of issues arbitrated before our State Industrial Relations

Commission." That is the real difference between New Zealand and Australia today.

On May 15 last year the Employment Contracts Act came into force in New Zea­ land. The Act ended

the system of com­ pulsory arbitration that had been estab­

lished almost 100 years earlier, and re­ placed it with a

method which gave employers ana em­ ployees the right to make either collec­

tive em ploym ent contracts (CECs) or individual employ­ m e n t c o n tr a c ts

iIECsi. with each other. The existing awards and agree­ ments were allowed

to expire but then had to be replaced by employment con­

tracts. Twelve months later the industrial landscape has been transformed, as more and more businesses get down to negotiating and

bargaining over their con­ tracts. Observers and critics of the

new approach have been un­ able to find any evidence of widespread or systematic rip­

ping off of employees. In fact, most employers have adopted or adapted the conditions and pay rates of the former award or agreement and set them out in contracts.

For employers two major breakthroughs have occur­ red. First, there is now the flexibility to employ staff at ordinary pay on any day and over a longer spread of hours. Second, penalty rates and

loadings have been removed or reduced to amounts that reflect the real situation of the business. Typically, the con-

• A u stralia's w ate rfro n t . . . its New Z ealand c o u n te rp a rt now stands as a sharp

tracts provide overtime and are based on a five-day work­ ing week — the difference

being that employees could be taking their "weekend” on Wednesday and Thursday. A substantial benefit has

been the necessity for em­ ployers to communicate and consult with their employees. A long-standing criticism of

management has been its re­ moteness and poor com­ munication, and the Act has in many ways, forced em­

ployers and managers to come to terms with this re­ quirement for a productive and efficient business.

Although official statistics are not readily available, there is substantial evidence that productivity has picked up, the “jewel in the crown" being the waterfront where gains of more than 50 per cent have been achieved, and not just through labor shedding.

In fact, the New Zealand waterfront’s efficiency now stands in sharp contrast to its Australian counterpart. A common statement has been that frustrating work and job dem arcations have been eliminated through CESs or IECs. Employees can no longer walk away from the

finishing and cleaning tasks — now they are accountable for the job from “go to whoa".

ΓΤ1 HE rights and interests I of employees are ex-

JL tremely well protected by the Act. reflecting the New Zealand Government’s con­ cern that employees are not

to be exploited and abused. Apart from legislation that establishes a minimum wage and holiday provisions, em­ ployees also have access to an employment tribunal or. if ne­ cessary, an em ploym ent

court, to deal with personal grievances and arbitrary or unjust dismissals. Industrial action is a factor

which influences every eco­ nomy. In the case of New Zealand there has been no persistent opposition in the

form of strikes from the labor movement. It would be naive not to acknowledge that strikes have occurred over employment contracts, but except in the early days, con­

certed opposition to the Act has not been strong. In any event, the Act outlaws indust­ rial action once contracts are in force.

For the New Zealand labor movement, the Employment Contracts Act has resulted in a 25 per cent drop in unionisa­

tion, as employees either pre-

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tracts provide overtime and are based on a five-day work­ ing week — the difference being that employees could be taking their “weekend” on Wednesday and Thursday.

A substantial benefit has been the necessity for em­ ployers to communicate and consult with their employees. A long-standing criticism of management has been its re­ moteness and poor com­

munication. and the Act has in many ways, forced em­ ployers and managers to

come to terms with this re­ quirement for a productive and efficient business. Although official statistics

are not readily available, there is substantial evidence that productivity has picked up, the “jewel in the crown" being the waterfront where gains of more than 50 per cent have been achieved, and not just through labor shedding..

In fact, the New Zealand waterfront’s efficiency now stands in sharp contrast to its Australian counterpart. A common statement has been that frustrating work and job dem arcations have been eliminated through CESs or

IECs. Employees can no longer walk away from the finishing and cleaning tasks — now they are accountable for the job from “go to whoa”.

Π Π HE rights and interests I of employees are ex-

iL tremely well protected by the Act. reflecting the New Zealand Government’s con­ cern that employees are not to be exploited and abused. Apart from legislation that establishes a minimum wage and holiday provisions, em­ ployees also have access to an employment tribunal or. if ne­ cessary, an employment

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court, to deal with personal grievances and arbitrary or unjust .dismissals. Industrial action is a factor

which influences every eco­ nomy. In the case of New Zealand there has been no persistent opposition in the

form of strikes from the labor movement. It would be naive not to acknowledge that

strikes have occurred over employment contracts, but except in the early days, con­ certed opposition to the Act has not been strong. In any event, the Act outlaws indust­ rial action once contracts are

in force. For the New Zealand labor movement, the Employment Contracts Act has resulted in a 25 per cent drop in unionisa­ tion, as employees either pre­

fer not to join, or not continue to be a member of a trade union. It is understood that

the labor movement accepts that its future rests with em­ ployees making a voluntary, free decision on unionisation.

A surprising fact about the Employment Contracts Act is that its provisions have been found to be effective and there has been no need to make any amendments to overcome “teething" or unin­

tended effects. If anything, it represents a victory for short, sim ple le g isla tio n th a t

hopefully will not be lost on our lawmakers. David Edwards la chief executive officer, Victorian Employera

Chamber of Commerce and In­ dustry.

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