The ERA in Practice. Ross Wilson

Speech by Ross Wilson, president, NZCTU, to Massey University seminar 19 September 2001

The Employment Relations Act has now been in force for almost a year and, although there have, and will continue to be, issues and teething problems, there has been nothing like the industrial relations catastrophe which some politicians and employer spokespeople predicted.

It is still early days in what I hope will be a long life for the Act there are some observations which can be made.

The first is that a more than 100 new unions have been formed and registered under the Act. The ERA implements in our domestic right the human right guaranteed to all employees by international law; the freedom to associate together in organizations of their choice called "unions". The CTU has always accepted that employee choice may result in new unions being formed and we respect that choice. If genuine new and independent unions do emerge we see that as being entirely consistent with the principle of freedom of association.

But those principles, and the new law, also require that new unions be truly independent and not part of an employer initiated strategy. There is some fairly clear evidence that the formation of some unions is more of an employer than an employee initiative, and the CTU has a legal monitoring group which is watching the situation carefully. At this stage we are not rushing in to legal challenges of new unions; our preferred approach is to market the advantages of existing well-resourced (comparatively) and experienced unions.

The reality is that there is more to being an effective union these days than incorporating a group of workers, and the benefits of belonging to a well-resourced professional union is recognised in the steady growth which established unions have been enjoying for the past two years. While it is said by some that young workers are not "joiners" any more, the reality is that in the less hostile post- ECA political and industrial environment, employees are joining unions in droves once union officials have been able to gain access to the workplace and provide them with information.

One rather disappointing development recently has been the legal challenge by MAF and the Employers Federation to the validity of the registration of 20 unions who, in an act of efficiency by the Labour Department, were registered a few days prior to the ERA coming into force on the 2nd October. The Registrar acted under a section of the Interpretation Act which enables Government officials to take steps which are necessary or desirable to ensure that the Act can take full effect on the in force date. This challenge by MAF, as part of its challenge to the validity of strike notices, was rejected comprehensively by the Employment Court. However, the N Z Employers Federation (now Business New Zealand) has taken the decision on appeal to the Court of Appeal.

My concern is firstly, that I cannot understand why the BNZ sees an interest in creating instability by challenging the vailidity of 20 unions, including some of the largest in the country, and the thousands of actions under the Act of both employers and unions who have acted in good faith in reliance on the validity of the Registrar's action. Secondly, it seems inappropriate for the BNZ, which was joined by the Court in accordance with the long established practice of hearing from central organisations of employers and workers on important issues, should take an appeal when the primary employer parties have chosen not to do so and in a situation now where all other issues in the case have been resolved. Even if the Registrar did act prematurely, there has been no harm done to anybody. We are presently waiting for a decision from the Court of Appeal on that one.

Workplace access by unions appears to be working without any undue difficulties. The Richard Prebble "Employers have everything to fear" speech scenarios of 20 or more union officials marauding through workplaces on a daily basis, as with his other horror scenarios, has not come to pass. Such fear tactics might seem like good politics at the time but I don't think they have done anything for his credibility.

I think that most employers are respecting the right of union organisers to have access to workplaces for recruitment purposes. We merely want to give employees the opportunity to consider union membership and collective bargaining. If employees are perfectly happy as non union then the organiser is unlikely to be there for long. If they are interested in union membership then there is no real point in getting the relationship off to a bad start by obstructing access.

And of course they are interested in union membership and unions are reporting a steady increase in union membership after a decade of decline under the ECA. Union membership was up 16,000 for the 12 months to the end of last year and anecdotal evidence indicates that most unions are experiencing steady growth. One union has reported a 45% increase in membership in the past six months.

Again, collective bargaining has been initiated on a widespread basis despite the dire warnings that the procedures are prescriptive and complex. Reports to me from unions indicate that they are handling the processes well and most employers are responding constructively and getting on with the job. At employer conferences I have attended this year most employers report they are finding that the new processes are working reasonably well, although they are keen to swap experiences and advice. There is also considerable discussion about the implications of the good faith requirements and I will comment on that in a few moments.

There is already a significant amount of multi-employer collective bargaining taking place. This trend is more marked in the public sector where there is a more compelling logic based on a single funder with employee and customer demands for certainty and equality of access throughout the country. Education unions have taken such initiatives in the early childhood area, and both employers and unions in the health sector are looking at national collective agreements as more consistent with national professional services, while acknowledging that there may continue to be regional variations.

There have been a number of disputes which have reached considerable prominence where a central issue has been coverage of the collective agreement proposed by the union. Interestingly many of these have involved news media companies: INL, NZPA. Radio NZ, and most recently the NZ Herald. All of these disputes have resulted in strike action over the issue of whether particular groups of workers can come together in a single collective agreement. This raises quite a fundamental issue of freedom of association which is one of the principles the ERA is founded on, reflecting ILO principles.

I hope that it is a transitional issue, and that employers move on from this ECA approach to bargaining where the employer limited the overage of the Collective Contracts by listing names. The ERA is about coverage of work, and the principle that all employees who are engaged in that work have a right to join the collective agreement by joining the union.

In the ports area the reluctance of industry employers to address the increasing trend towards casualisation of waterfront labour, and the negative effects particularly in regional ports, is forcing the waterfront unions to consider multi-employer bargaining as a means of negotiating some minimum standards of decency in employment conditions and training in the industry. The South Island waterfront dispute is a legacy of the Employment Contracts Act which encouraged employers in a competitive industry to compete on labour-related costs. This casualisation and de-skilling of the industry is not only unfair and unsafe for port workers, but is counter-productive for an industry which should, at least substantially, be based on a highly trained and highly skilled workforce.

So yes there have been a number of high profile disputes but it is certainly not the case that there has been any significant increase in strike action.

Whatever factors we consider, there was the lowest number of stoppages for a decade in the year to March 2001.

In the March 2001 quarter there were two lockouts and six strikes. If this trend continued the annual number of stoppages would be the same as 1999 and less than the rest of the 1990s.

In fact, there has been a significant reduction in the number of working days lost through strike action over the past 23 years.

Days lost fell from 331,000 in 1990 to 53,000 by 1995. However, the trend began well before the Employment Contracts Act was introduced.

In 1977 there were 562 stoppages. In 1980 there were 360 stoppages, falling to 215 in 1986, 137 in 1990, and 35 in 1998.

So although it is true that the number of stoppages has reduced under the Employment Contracts Act, the reduction started 23 years ago.

The big area in the new Act is undoubtedly going to be the impact of the good faith requirements. I don't think we should under-estimate just how far-reaching those requirements might be in constraining and influencing behaviour - of both employers and unions.

Although it seems entirely sensible that there should be good faith dealings in respect of an employment relationship which, by its nature, is based in mutual trust and confidence, the good faith requirements are a new concept for our employment law.

We now have an Interim Code of Good Faith agreed between the CTU. The approach to this issue by some opposition politicians and employer spokespeople has been rather confusing and contradictory. Many who had criticised the "overly prescriptive" nature of the Act later attacked the Code as being too generalist in nature ( Richard Prebble ACT Press release 25 September 2000). And as the well known employment lawyer and commentator Christine French has pointed out employers organizations who had identified particular points of concern in the ERA, and had argued that costly litigation would result, then resolutely opposed attempts to have their concerns systematically dealt with in the interim Code (Christine French in paper to NZ Law Society Employment Law Conference).

The CTU approach is that it would have been helpful to adapt to the new Zealand environment, and codify, the Canadian case law on good faith which would obviate the need to litigate. By doing so uncertainty would be avoided as well as the cost of unnecessary litigation. But in the end that is no what the employers wanted and we have a minimal code.

So it is clear that we need to build up good faith at all levels. And we need more than a law as the touchstone for good faith. Good relationships can only be developed in any real sense through honest and fair dealings.

The CTU's overall objective is to promote a bargaining environment of intelligent consideration and debate. Intelligent debate is more likely to occur if it is properly informed debate. We therefore see disclosure of relevant information as being an essential part of both respecting the process of bargaining and respecting the negotiators' responsibility to address issues seriously.

There are of course different levels of "engagement" in those good faith relationships. Starting at the lower level and working up, these include:

management sharing information consultation with the union on management decisions participation by the union in developing solutions, changes and proposals the union as a full partner in reaching and implementing decisions

We can see the full range of the levels of engagement in place between unions and employers in New Zealand today.

Harvard University research has highlighted the real value that employees and their unions can play in generating debate about the direction of the organisational and operational aspects of a business, so that employees and unions can add value to management decisions and the planning process for their common benefit.

There is no doubt that the quality of those relationships will be very important in determining outcomes under the new Act.

The good faith requirements are about process and procedure. The content of Collective Agreements will come down to what the parties can negotiate - and of course s 33 (possibly the most important section in the Act) is very explicit about this.

We have already seen that the pressures of the market will continue to play a very important role in negotiations. Despite the political rhetoric the Act is not, in itself, a magic bullet for improvements to wages and conditions of employment.

Several points flow from this:

It is not a return to the 1970's and 80's bargaining. We now live in a very de-regulated and open economy. The good faith provisions will not in themselves drive up wages in sectors where there is no excess supply of labour - particularly unskilled labour Bargaining success will be dependant on organising success. As the ILO Conventions recognise ...right to organise and effective organising as the foundation of collective bargaining The minimum code - and the Government programme to upgrade it - will continue to be very important for a large section of the workforce. We must see the ERA in the context of the other Govt policies such as industry training & development. To get major income and productivity gains for many workers we need to create better skill formation and sure that more workers can move into higher paid jobs To do that we need to encourage the development and enhancement of constructive and co-operative relationships between unions and employers -at both an enterprise and an industry level. So as well as meeting union members short term expectations that the ER Act will increase their bargaining power - we see the Act in the context of the longer term strategy of building the skills of our members and future members by greater investment in public education and industry training, and by strategic investment in industry development .

We believe that the restoration of fairness in employment law can translate into a re-building of social capital - of the goodwill and co-operation that has been absent from many workplaces during the ECA era, and which has undermined productivity growth. There are some signs that this more positive feeling among employees is having a positive effect on their behaviour and productivity.

I think there are also some signs that the new mediation service and the new "relatively de-legalised" Employment Relations Authority are achieving their purpose; in the case of the mediation service an informal and readily accessible mediation process to address an issue before it gets insoluble.

I understand that small employers, in particular, are finding that the easy accessibility and flexibility of the new mediation service is a vast improvement on the more formal approach, and the delays, of the Tribunal.

Similarly, there have been suggestions that the form and process of the Authority breach the Bill of Rights and the Magna Carta. We have had an unfortunate decision of the Employemnt Court that allows lawyers to decide the extent of cross examination and thus again control the process. I think most people would agree that the old Tribunal had become very legalistic, and the essential concern about the Authority is not whether lawyers are allowed to cross examine at length on marginal points, but whether it delivers decisions which have credibility with employees and employers alike as being fair. Time will tell whether that is the case, but I don't think that lawyers are essential to the process in most cases employment problems.

Overall I think it is acknowledged by most people that the Employment Relations Act is bedding in with surprisingly little difficulty, at least to those who were predicting dire industrial and economic consequences. There are still some politicians and employer spokespeople who are determined, for understandable party political reasons, to find fault and blame it for every industrial dispute which occurs, including those like the vets and the waterfront which are a product of the ECA. We need to get past this sort of political rhetoric.

On the whole unions are made up of ordinary people who want to see strong economic growth built on constructive and inclusive workplace relationships and mutual respect.

Whether the new ER Act will result in more harmonious relations depends as much on employers as it does on us. I hope we can get past the stereotype images of employers and unions, and make the new Act work for the benefit of all New Zealanders.

ENDS