Australia vs New Zealand: 7 Things Aotearoa Is Doing (And We’re Not) To Protect Workers, Not Crush Them



Australia has much to learn from our closest neighbour, writes Alison Pennington.

Jacinda Ardern’s compassionate and uniting leadership in the wake of Christchurch events has resonated with millions of Australians. And it seems there are other areas where we could learn from our New Zealand neighbours, too.

Since taking office in October 2017, Ardern’s Labour-Greens-NZ First coalition government has pursued an ambitious program of labour policy reform, using several initiatives simultaneously to tackle low wages and inequality, and build more inclusive workplaces.

For decades New Zealand has been an example of what happens when a radical labour market “flexibilisation” project goes too far – wages growth, skills systems, productivity and growth were all compromised.

Beginning in the 1980s, New Zealand implemented one of the most extreme experiments in individualised labour policy of any industrial country: collective bargaining was almost totally dismantled, union membership plummeted, and individual contracts were universalised. Today around 70 per cent of all New Zealand workers are on individual contracts. Not coincidentally, last year almost half of all private sector jobs received no pay rise at all.

Now unions and civil society groups are fighting to reverse this legacy. And alongside a government with an appetite for reform, they’ve embarked upon an ambitious attempt to rebuild collective bargaining, boost wages, and reduce inequality. What’s more, a tri-partite tradition in policymaking has been resuscitated by the new government. Working groups of unions, government, employers and experts are now collaborating to design and implement the new policies.

My recent report for the Centre for Future Work catalogued  several key labour policy reforms currently underway “across the ditch”, highlighting their relevance for Australia’s own evolving debate over workplace policies. Here they are:

1. Bargaining at the industry level

There is a growing consensus on both sides of the Tasman that the current workplace relations system — based largely on individual contracts, with minimal enterprise-level bargaining — has failed to deliver decent wages and fairer income distribution. New Zealand is moving ahead quickly in this area, with a new system of “Fair Pay Agreements” (FPAs). They allow representative employers and employees to create industry-wide agreements setting minimum terms and conditions of employment for all covered workers – including wages, hours, leave, allowances, weekend and evening rates, and more.

2. Minimum wage and living wage

Strengthening the minimum wage is of particular importance in New Zealand since so many workers are paid according to legal minimums. Upon election, the Ardern government immediately agreed to a four-year schedule of substantial annual increases to the minimum wage.

At the same time a vibrant Living Wage Movement comprised of 70-member organisations in unions, churches and community groups is keeping up the pressure on employers and councils to go even further, and implement a “living wage”. The Ardern government has agreed to extend the living wage to all government employees.

Australian unions are also pushing for a “living wage,” and the ALP recently announced that living wage principles will be inserted into the Fair Work Commission’s wage-setting directives. New Zealand’s minimum wage is already significantly higher (relative to economy-wide average wages) than Australia’s, and heading higher. So the New Zealand experience shows that an even more ambitious approach to raising the minimum wage is possible here.

3. Bargaining pay equity

Pay equity is a key pillar of New Zealand’s strategy to boost wages growth. Like in Australia, women in New Zealand are more likely than men to be in part-time employment with insufficient hours, and more likely to work in the lowest-paid industries (like healthcare and social services).

A recent landmark court settlement for care and support workers was reached in New Zealand, that was then implemented through collective bargaining. The settlement delivered pay increases of up to 50 per cent for tens of thousands of workers. The New Zealand government is now changing legislation to reflect similar principles and create an accessible bargaining mechanism to facilitate pay equity settlements economy-wide.

In contrast, Australia’s complex quagmire of top-down pay equity policies has failed to make meaningful progress in removing pay discrimination, and low wages remain entrenched in feminised industries.

4. Unions and collective bargaining

Union rights to represent workers and take industrial action are already less restrictive in New Zealand than in Australia. And a suite of legal reforms to further improve unions’ ability to access and organise in workplaces and collectively bargain has now been passed by the New Zealand government. These reforms will significantly enhance the prospects for unions to build membership and conduct collective bargaining at multi-employer, industry-wide, and occupation-wide levels.

5. Labour hire workers

Insecure work arrangements such as temporary, labour hire, casual, independent contractor and “gig” work are a growing reality for most workers, but government regulations and protections for these workers have not kept up. To start to plug this regulatory hole, a new Bill before the Parliament proposes to extend labour hire workers’ rights to pursue employment grievances against their host firm. This will strengthen unfair dismissal rights for this group of insecure workers.

6. Paid domestic violence leave

Legislation for 10 days paid leave to workers experiencing domestic violence (DV) was passed in July 2018, making New Zealand one of the first in the world to legislate paid DV leave at a national level.

Domestic violence is a pervasive problem in Australia, and most women who report experiencing violence are in the workforce. Despite this, Australia is yet to implement paid DV leave, with negative consequences for women’s safety and financial and job security.

7. Lessons for Australia’s “moment”

New Zealand has launched this new era of workplace reform from the rubble of decades of brutal market-worshipping labour policy. Australia must also confront the fact our enterprise-level bargaining system is collapsing. It fails to extend basic bargaining rights to the vast majority of workers, and to deliver adequate (or any) wage increases.

What remains of enterprise bargaining in Australia depends on the voluntary engagement of employers, and on the valiant efforts of a diminishing number of unionised workers to defend hard-fought above-Award outcomes. Highly restrictive laws that limit union rights, industrial action, and bargaining at anything other than the enterprise level will ensure the continued disappearance of collective bargaining – unless we fundamentally change direction.

The lessons of New Zealand’s workplace reforms are both timely and important, as Australia heads into a federal election in which debates over work and wages are already playing a critical role.

Stronger collective bargaining and collective representation play a crucial role in every one of the new reforms being pursued in New Zealand and we have a unique opportunity to learn from the ambitious efforts of our Trans-Tasman neighbours.

Alison Pennington is an economist at the Centre for Future Work, in the Australia Institute. Alison has written on public transit and flexible work arrangements and has a background in public finance, and public sector unions. She is currently researching the evolution of collective bargaining in Australia.