The Law and the Labour Market
Transition: Labour Relations in New Zealand in the 1980s and 1990s
There are three indicators that a society is handling
its labour relations the wrong way: the existence throughout
industry of industrial relations specialists, necessary
because the subject has become overly technical as
a result of its politicisation and the removal of focus
from the workplace or enterprise to special forums;
discussion of industrial relations in terms of power
rather than productivity and profit and as a separate
subject rather than as one aspect of management; and
regular and widespread allocation of space in the press
to the discussion of industrial relations issues by
specialist reporters, often chosen, it seems, because
of their interest as activists in their own union,
rather than their even-handed familiarity with the
issues. Throughout the 70s and 80s in New Zealand all
three burgeoned. Something was wrong; but at last we
are beginning to fix it.
The National administration of 1975 to 1984 was characterised
by idiosyncratic centralist intervention, culminating
in the wages and prices freeze of 1983-84. The advent
of the New Zealand Party, formed solely with the purpose
of dislodging National, shaped the 1984 election decisively
in Labour's favour. David Lange seemed a buoyant positive
leader, confident and expansive. The country responded.
Labour won. The handover, however, precipitated a crisis
as former Prime Minister Muldoon sought to cling to
the prerogatives of power.
The crisis demanded a decisive response. So it was
that, from the first, Roger Douglas took centre stage
and was seen to be the man in control, the man who
knew what he was doing. Certainly he was, probably
uniquely, prepared. His years in opposition had been
diligently spent. He had consulted widely, and listened.
He was Labour's only and obvious choice as Minister
His initiative was a powerful sign of things to come.
The country, even many of his own colleagues, had little
idea of the direction events were to take, nor the
speed with which they would move. Labour's Minister
of Labour was to say later that prior to taking office
he had known nothing of what was by then called Rogernomics.
He had, however, had his own ideas for labour relations
reform. That these had crystallised in the context
of a discarded mode of economic management, and so
were dissonant with what Douglas was up to, was not
alluded to, if it was perceived.
Labour's first three year term was dominated by Douglas's
actions and policies. He had around him a cadre of
enthusiastic and able supporters. They claimed the
credit for dislodging former leader Rowling and putting
David Lange on the throne, and certainly Lange responded
---with the exception of his shift on the issue
of nuclear warships---as their enthusiastic if
slightly perplexed chairman. Until early 1988, when
Labour, having won the 1987 election solely on the
basis of what it had already done, fell off the rails.
They were never again to unify. Their disarray was
palpable, culminating in Lange's resignation thirteen
months away from the 1990 election. Palmer followed,
never convincing, and then, in response to the polls,
the modern equivalent of reading the entrails of a
retired chicken, Mike Moore. So Labour inevitably
lost the election: National took office with an economic
policy not too dissimilar to Labour's and conscious
of the need to differentiate themselves. With the
knowledge that victory was almost certain they had
focussed, in the previous three years, on labour relations:
in that policy area certainly, there was room for a
distinctively different response.
The Labour administration had transformed the agencies
of the State. Activists, such as Richard Prebble,
had been appalled at the fat and feather-bedding they
had discovered in the State's administration. Prebble,
having promised to preserve Railways, realised that
was only possible by halving its staff. He was part
of the team which designed major changes, and deserves
credit for it. The private sector was a completely
Taking office, Labour had to contrive an exit from
the wage freeze. It was part of the price they paid
for union support in the election. Another part was
the restoration of compulsory unionism: National had
introduced voluntary unionism of a type in 1983.
In making these changes however Labour had to come
to terms with the omnivorous nature of the union movement's
appetites. Another part was the restoration of compulsory
unionism: they wanted the right to strike: but they
also wanted the retention of compulsory arbitration.
It was one of the four pillars upon which unionism
in New Zealand had slumbered for two generations.
Compulsory unionism had been devised and provided
for by the first Labour Government, in 1935. By 1990
approximately 40per cent of New Zealand's workforce
was paid and employed under terms and conditions set
out in awards: every award required those workers to
join a union.
Which one was not a matter of choice. By the operation
of 'registration of rules' unions staked claims to
segments of the workforce. Each union's membership
rule described the type of work it covered. Those
performing that work had to join that union, which
thus had monopoly coverage.
Each union's geographic range was a function of the
existence of eight industrial districts. Devised in
1984, these were basically the same as the provincial
boundaries which had existed up till 1872 when provincial
government was abolished. They were relevant to population
distribution in the 19th century: they were an anachronism
They did however, serve a purpose---they helped
perpetuate 'blanket coverage'.
Since their membership rules gave them a monopoly,
unions also enjoyed a monopoly over negotiation. They
could initiate negotiations with 'their' industry.
Many such industries, however, contained hundreds of
employers. To ease their administration, unions were
permitted to cover all employers by notifying only
a representative sample of their claims. If the sample
was representative in each industrial district the
union wanted to cover in its negotiations, all
employers would subsequently be bound by the award
which resulted. Quite conceivably many employers and
their employees would not have known the negotiations
were taking place. This administrative device was called
In the cost plus economy before 1984 employers complacently
accepted this nonsense. It helped the development of
New Zealand's industrial relations club---union
officials who regarded the benison this system delivered
as a right, and industrial relations officers or managers
generally, in the larger companies, who became mostly
docile lubricators of the juggernaut, ensuring the
system---self contained, cosy and oblivious---
Occasionally, but only very occasionally, some trouble-maker
made demands of the system which it found indigestible.
Settlement was not reached. For this purpose the Arbitration
Court (later the Labour Court, now the Employment Court:
of that more below) was set up. Unresolved disputes
could be referred to it compulsorily---at the
initiative of the claimant, almost invariably a union.
The unsatisfied disputant, the employer, had no choice
but to attend. The Court decided by reference to historical
relativities. The entire process was mechanistic and
retrospective: novel notions such as inability to pay
or reference to productivity or profit were eschewed,
and were in any case unworkable when perhaps hundreds
of employers were involved.
These then were the essentials of the system the fourth
Labour Government inherited in 1984:
- compulsory unionism;
- monopoly union coverage through registration of their
rules with the central bureaucracy;
- blanket coverage;
- compulsory arbitration.
Some of Labour's new administration, however, were
in a mood to quibble. (This was not a new phenomenon,
especially among the more vigorous Labour politicians).
Norman Kirk, their last charismatic leader and a former
stationary engine driver, had declared shortly before
his death in 1974 "I've had a gutful of unions". This
time it was Richard Prebble who told the Federation
of Labour that they could not have 'the right to strike'
and compulsory arbitration: they were incompatible.
The Federation of Labour had entered the talks with
a mandate to retain the right to strike. They had no
mandate to discard compulsory arbitration. In that
case, said Prebble, the Government will have to decide:
it abolished compulsory arbitration.
This move---a radical break with the past whose
significance was not grasped by employers for some
time---did not arrive wholly without gestation.
Employer concern at the uneven exercise of the four
major union monopolies referred to had helped provoke
discussions of reform of the system over previous years.
Essentially, though, time had been called 'Balance
in Bargaining'. It had been about reducing the perceived
imbalance, not demolishing the structure.
Broadly, however, political Labour responded, in the
private sector, to industrial labour's demands. The
wage freeze ended and an automatic wage round followed.
Compulsory unionism was restored. And the process
which led to the passage of the Labour Relations Act
1987 was begun.
In this, as in many other aspects of labour relations,
history is various and flexible. Reference is made,
now, to 'the debate' which preceded the Act. There
was no debate. The central organisations talked to
each other and in the customary response of peak peers,
self-perceived, excluded everyone else.
The Government announced its intention to reform the
labour legislation. It set out its broad parameters.
It called for comment. Hundreds were made, many of
them substantial, book-length. Then the bureaucrats
were asked to summarise them and the summary was published.
In all this process, however, the policy makers were
very coy. It was difficult to get them to debate the
None of this should surprise. Essentially they had
a program. It was capable of being modified but not
dislodged. Debate---especially with radical proponents
of change---would have threatened their preconceptions.
For employers there were two broad approaches: the
gradualist approach of the Employers' Federation and
the radical proposals of the Business Roundtable.
The Employers' Federation was part of the club. Administratively,
unions had in the past relied on its organisations
to distribute and promulgate the claims leading to
and the results leading from the systems of oblivious
bargaining. If employer organisations had disappeared
so would have the old system.
Consequently, the Federation took a clear reformist
line. Its proposals embodied substantial change,
but it shrank from radicalism. Its line preserved
the specialist nature of labour contracts. It endorsed
the perpetuation of the Labour Court.
The Roundtable, on the other hand, saw labour contracts
in the same light as any other. Its ideal legislation
would have been a few pages long, setting out only
the bones of the structure. Its proposals were permissive,
not prescriptive. It saw no place for the specialist
jurisdiction of the Labour Court. Labour contracts
belonged in the civil jurisdiction, like any other
The new legislation contained some significant improvements
but essentially reflected the tame and tired expectation
that the old system should continue, improved. For
employers, so called sanctity of agreement was guaranteed.
Previously unions had been able to initiate second
---or even third-tier negotiations without explicit
legal hindrance. That went. Also the State retired
as enforcer: previously the Labour Department had enforced
the terms of awards and had initiated scores of legal
actions annually, always against employers. Most of
these were wage recovery actions, or were related to
safety. Unions breached awards and statutes with impunity,
the State genuflecting to industrial labour's mythological
That went too. From 1987 onwards unions had to enforce
their own awards and agreements. For employers, access
to compliance orders and injunctions-previously available,
but rarely used, in the civil courts---was another
useful addition to the industrial code.
Structurally however little changed, and in some ways
things worsened. Seemingly because of the Minister
of Labour's personal belief that capital would aggregate
and needed to be met by aggregated labour, unions were
required to be a minimum size: 1000 members. They were
given some time to merge, since the 350+ unions included
some very small organisations indeed. That they suited
the purpose for which they had been formed was ignored.
Monopoly unionism, including the remaining three of
the four pillars, was retained. Only unions were able
to exclude specific employers from the continuing pattern
of national craft-based awards. Commonly relatively
small organisations had employees whose wages and conditions
were set in 10 to 15 separate documents. To opt out
an employer had to pay. The premium was high. Even
so, unions refused to countenance exclusion, frequently.
The system delivered to them substantial political
clout, since it engendered a wage round, heralded in
the press as an annual event, a jamboree of political
self-perpetuation for the institutions, and the wage
round gained a lot of attention from the Government
of the day. It represented political leverage to the
union movement (and, incidentally, to the employer
organisations) and trend-setting award negotiations
were frequently interrupted and redirected by Government
politicians, of whichever party. This was heady stuff,
the big time. The major players were not about willingly
In the meantime Rogernomics was at work in the rest
of the economy, overturning the old world and bringing
in the new. The Labour Relations Act was passed in
1987. Rogernomics was the Government. It underpinned
all their activities, winning converts by its sense,
and losing support in industry by its pace. Pressures
built up to slow it down. Roger Douglas delivered his
vision of tax reform in December of 1987, then went
overseas. While he was away David Lange called a halt:
it was time, he said, for a breather. Time "for a cuppa
Against the vivid activity of the previous three years
the ordinariness of Lange's imagery appealed to those
alarmed at the changes, and the rate of change. And
it signalled the beginning of the demise of the Labour
They had only recently won the 1987 election, solely
on the basis of what they had done, not because of
anything else they contemplated. Most of the 'manifesto',
in bits and pieces, appeared after the election, or
a day or two before it, when it didn't matter. They
won because they seemed to know what they were doing
and because Roger Douglas had treated the electors
as mature and thoughtful people able to understand
why his actions were necessary. Suddenly they fell
apart. Factions warred, bitterly and publicly. Lange's
support evaporated. For eighteen months he fought
against the Douglas camp, and it was wearing, since
that camp included most of those with vision and tenacity.
At the end of that time Lange had had enough. It
was clear Labour could not win the 1990 election if
he led it: it was not clear anyone would change that.
Geoffrey Palmer had eleven months to try. The polls
said he failed, so he went, succeeded by Mike Moore.
Desperately he tried to stitch together some appearance
of accord, and in a move reminiscent of the Labor Party
in Australia in 1983 made a Growth Agreement, solely
with the unions. It was a pallid response to a palpable
catastrophe. In the election Labour was rejected on
an historic scale.
National was ready. It had settled its leadership
problems: new Prime Minister Bolger was clearly in
charge. It had felt uneasy at charges in the years
before the 1990 election that it was sleep-walking
to victory, because its economic policies were not
very different from Labour's. It needed to distinguish
itself. It chose to do so by its labour market policies.
Firstly it entrusted its labour market proposals to
Bolger's closest friend. Bill Birch has been associated
with the anathematised Think Big projects of the Muldoon
administration. Even those who disagreed with him
acknowledged that he was able and diligent. He knew
---knows---the ways of Wellington. (Perhaps
too well: like all political capitals it is suffused
by gossip, petty intrigue, bureaucratic arrogance,
and a perversely proud distance from the real worlds
of commerce.) And he brought to his task an energy
which was welcome.
In the years 1988-1990 Birch sought views in all quarters.
He listened. He learned the language of the labour
market and some of the arcana of New Zealand's industrial
relations system. National recognised---the OECD
and others had been saying it loudly---that Labour's
economic approach was being sabotaged, even in the
first term, by its refusal to unlock the labour market.
Birch said repeatedly that their labour policies were
integral to National's economic policies: he delivered
them back to where they belonged.
It was clear that change was inevitable. Even so,
the union movement was surprised by its range and speed
after the 1990 election. Birch had learned from Douglas.
The election was in October, the Employment Contracts
Bill was before the House by Christmas, it was law
by 15 May. It was a significant achievement and it's
perhaps natural that there is now a tendency to sit
back and take it easy. But it's regrettable.
Because significant though it is, the Act is only
a half-success. It did some major things well. It's
left some serious flaws in place.
What was the nature of the draft legislation?
What was the response?
The legislation did two things very clearly: it reintroduced
voluntary unionism in a form that made it freer even
than National's 1983-84 legislation, and it reformed
bargaining structures and processes. Unfortunately
it shied from some other difficulties.
It did not really deal with the existence (or not)
of the Labour Court. Basically the Court and the Mediation
and Conciliation Service were left intact: the Government
called for comment from the CTU and the Employers'
Federation, and published an options document which
those writing to or appearing before the Select Committee
were asked to comment on. And the personal grievance
(contested dismissal plus appeals against 'disadvantage')
mechanism was left in place. It was significantly improved
in one way: procedural defects were required to be
set aside if substantive cause was proven.
This was a major benefit. The Labour Court had grossly
distorted the process by which employment could be
terminated, by finding even the most minor procedural
defects and rejecting well-founded dismissals because
of them. Lay members of the Court told of judges actively
seeking procedural defects and basing their whole finding
This was more damaging than it may sound. Managers
are not computers. In almost any case, if a hostile
judge sought long enough, he would find some defect
in the way a manager had administered discipline and
handled a dismissal. Managers throughout New Zealand
were becoming tentative about their ability to manage:
they were happy to be required to behave fairly. They
were less confident of their ability to behave impeccably.
By and large the union movement accepted the advent
of voluntary unionism. They had been told privately
by Labour that if they were returned to power in the
future they would not reintroduce compulsion. It was
the change to the bargaining process which alarmed
them and which provoked a rhetorical storm and marches
in the street.
Union monopolies in bargaining were all removed. Their
monopoly rights to represent certain groups of workers
were abolished. They---and others, anyone---
had to compete for the right to represent. Workers
were empowered to select their own bargaining agents.
Individual workers, even then, could opt out. The link
between union membership---now voluntary anyway
---and representation was broken. Theoretically
employees could choose one union to assist them in
negotiations, which they would pay for that service,
and another union to belong to: in which case they
would pay membership fees. People were free to represent
The results of negotiation were to be contracts: collective
or individual. An employer was free to refuse to negotiate
a contract. There was no reintroduced compulsion to
go to arbitration.
Employees in pursuit of a collective contract could
legally strike, provided their previous contract had
expired. The employees of two different employers
could not legally combine in strike to try to force
those two employers into a single negotiation.
This last measure underlined the emphasis the legislation
placed on negotiation at the level of the enterprise.
'Industry' bargaining was possible, however, if people
wanted to do it.
All enforcement of contracts was to be a matter for
The reason for unions' concerns was clear. Their
three remaining major pillars of monopoly---compulsory
unionism, monopoly through registration of rules, and
blanket coverage---were gone. Employees were
granted the right of self-determination. Employers
were given the ability to determine the shape of their
own bargaining structures.
One union response was to ensure that hundreds of
submissions were made to the Select Committee charged
with reviewing the Bill between the first and second
readings. Another was mobilisation.
Fortuitously for unions, another of the Government's
policy announcements had engendered an even more widespread
negative reaction. Prior to Christmas 1990 cuts to
State benefits were announced, effective from 1 April
1991. Unions and beneficiaries combined to stage protest
rallies. In every major city streets were filled,
effigies of Birch and Bolger and Ruth Richardson were
burned. Schoolchildren participated. I watched one
march and asked an enthusiastic protester, aged about
sixteen, why she was marching. "Day Off!" was the
prompt response. It seemed to sum up much of the thinking
and habits and attitudes that New Zealand needs to
reject. It was encouraging that she found the new
legislation alarming, if indeed she knew much about
The news media behaved like the public relations arm
of the union movement. Shrill headlines, scant and
customarily uninformed content, deliberate imbalance,
all characterised most of the presentations in the
press, on radio, and on television. The language and
manner were often near-hysterical. The press excelled
itself. The Bill was months old, literally, before
the first dispassionate account of its contents appeared,
characteristically in the South Island newspaper first.
It was a good article, but where had it been, gestating
for so long? The legislation's not complex.
The universities behaved as one would expect. In
the labour relations field New Zealand's universities
are described exactly by a recent comment of Paul Johnson's
(The Spectator, 7 September 1991):
- "Universities are the most overrated institutions
of our age. Of all the calamities which have befallen
the 20th century, apart from the two world wars, the
expansion of higher education, in the 1950s and 1960s,
was the most enduring. It is a myth that universities
are nurseries of reason. They are hothouses for every
kind of extremism, irrationality, intolerance and prejudice,
where intellectual and social snobbery is almost purposefully
instilled and where dons attempt to pass on to their
students their own sins of pride. The wonder is that
so many people emerge from these dens still employable,
though a significant minority, as we have learned to
our cost, go forth well-equipped for a lifetime of
What he might have added, if I'd asked him to focus
especially on the labour relations 'experts' in New
Zealand universities, is that they are, more often
than not, left-wing, with little or no real experience
in industry or commerce and seeking none, tenured and
arrogant, who publish elaborate off-key propaganda
which is bolstered by footnotes citing their equally
ignorant colleagues' previous publications.
They were everywhere: on the radio, in the papers,
possibly in the marches, hailing the end of civilisation
as we know it, and worse.
The Labour Party was still stunned by the election
result but they heard the bell and reeled out to the
centre of the ring, jabbing at phantoms and muttering
intensely, "We'll repeal it, we'll repeal it."
(Unfortunately, since the passage of the Bill and
its implementation on 15 May Labour, which has had
time to reconsider, has restated its intention to repeal
the Act. That's a shame: it will be working so well
by the time they get back in, even allowing for the
Employment Court's intervention, that repeal will be
destructive. Labour are also talking about the 'negotiated
economy'. The negotiations referred to will not be
with the electorate, but with the CTU, which does not
have to bother with electoral endorsement. Labour remains
curiously reluctant to forego the sins of lopsided
Employers' responses to the two major reforms in the
Bill were strong and positive. Unfortunately many of
them, and the Employers' Federation, spoke in favour
of retaining the Labour Court. They rue it now, with
no excuses. The Court's response to the legislation
---the same people are on the new Court as were
on the old---was entirely predictable. It was
a major tactical failing of employers generally, and
it has been used as a justification, subsequently,
for keeping the Court on, in comments made more than
once by the Minister of Labour. The Business Roundtable
and a handful of major employers got it right, and
advised the Select Committee to jettison the Court.
They were ignored.
The Select Committee worked very hard, and was a disaster.
The Government members could not be faulted for diligence
or stamina. Hearings frequently ran from early morning
till late at night. They left Wellington and heard
submissions in other cities. They applied themselves
to the task with unremitting energy. The fruits of
this application, however, were a significant disservice
to employers, and in some respects, to all parties.
The way the Committee functioned revealed a serious
flaw in the process as a whole. It is completely unacceptable
to have inexperienced people listen to hundreds of
submissions on a crucial and complex Bill, deliberate
amongst themselves, and bring forth a non-reviewable
result which affected parties have no chance of commenting
on. It also delivers an appalling influence to the
bureaucrats who service the Committee. None have private
sector experience: it would be surprising if they did
not have their own agendas. From this combination
of ignorance and aspiration can only come misfortune.
And so, for employers, it proved to be.
For one thing, with no forewarning, the Select Committee
removed the Bill's safeguard against the Court's ability
to use procedural deficiencies to overturn otherwise
justifiable dismissals. Motive for this change was
confused: the Minister on one occasion maintained that
a different section of the legislation achieves the
same end. He was wrong. A member of the Select Committee
said they were persuaded that procedural unfairness
can shade into a substantive deficiency. There is
a small merit in the point, but nothing significant
enough to justify the change. Employers were dismayed
and taken unawares: most were confident that the Government
had understood the importance of this change, at least.
The Select Committee also extended the Employment
Court's jurisdiction to all contracts of employment.
Previously only the less than 50% of the workforce
covered by collective agreements or awards came within
this Court's purview. The majority of contracts were
reviewable in the civil courts. In those the Addis
doctrine had customarily applied, with the addition
of an explicit requirement to behave fairly, as an
employer, and more recently with recognition (one case
only) of humiliation as a factor requiring compensation.
The sensible course for the Government would have
been to sustain that division of jurisdictions.
Perhaps they were lured into this error by decision
to extend a statutory right of review of grievances
to all employees. They need not have been. The extension
of process could have applied and the divided jurisdiction
The Select Committee also, perhaps persuaded by the
Armageddon-rhetoric of complainants or even alarmed
at its own Government's boldness, invented a power
of review by the Court of employment contracts, on
the basis that they may be 'harsh and oppressive'.
The term is undefined. Its incidence is alarming:
it gives a Court determined to be a law maker anyway
a licence to prohibit and obstruct.
To replace the previous mediation service the Select
Committee invented Employment Tribunals. These are
judicial bodies with powers to arbitrate and mediate.
The Committee failed to recognise how much more difficult
and important mediation is. The new format promises
to be a fine source of employment for lawyers whose
trade union, the New Zealand Law Society, has nevertheless
raised with the Government a significant range of important
technical deficiencies in the way the Tribunals are
established. The bureaucrats, after the Act was passed,
have had a field day. The minutiae of administration
have been fulsomely and meticulously attended to.
Tribunals are instructed, for example, that their
Clerks must enter the room before them and announce
in loud clear tones to the attending parties, "All
stand for the Member." No evidence is required, apparently.
As I've said, the Court has been retained; same personnel,
different name. It is now the Employment Court.
All through the presentation and discussion of the
Bill in the period December 1990 to May this year the
Government was sensitive to charges that the legislation
was intended to destroy unions and reduce wages. Never
mind that the state of the economy was having some
small influence on earnings. The Minister had, in any
case, always been a believer in 'a minimum code' including
a minimum wage. It was his defence against charges
of callousness to low wage earners who would be deprived
of union aid, once the legislation had destroyed the
unions. Consequently the Select Committee, out of the
blue, gave everyone in New Zealand five days a year
to use for sickness, or bereavement, or domestic leave.
No proof of need is required: no provision is made
to off-set leave already provided by company policies
or existing collective contracts. No thought, in fact,
seems to have been given to its application at all.
One Committee member has subsequently explained that
its advent was 'political'. With unconscious gallows
humour the Committee provided for this special paid
leave by an amendment to the Holidays Act.
Fortunately the Select Committee did not molest the
two major initial reforms of the Bill---voluntary
unionism and bargaining reform---but the results
of its deliberations, in fact the whole Committee process,
call into question the wisdom of letting inexperienced
politicians steered by experienced bureaucrats loose
on an important and innovative piece of legislation.
It is uncertain just how much continuing control the
Minister attempted once the Committee started pruning
and inventing: if the changes don't reflect his views
he's guilty by omission. If they do reflect his views
he understood less in the three years prior to the
election than many of us believed, or hoped.
Since the passage of the Act a great deal has happened
to please and depress. The Act has a significant section
dealing with transitional arrangements. Four important
cases have gone to the Employment Court. Their decisions
are all being appealed. Summed up, they attempt to
establish that employers have no ability, even by the
giving of adequate notice, to vary or amend any condition
of employment that applied on 15 May. They have even
applied this to provisions from collective documents
relating to union 'rights'---stopwork meetings,
as an example.
One consequence of two generations of State-sponsored
monopoly and protection is that unions have become
understaffed for the new environment, where they have
to get to prospective members and market themselves,
which most don't know how to do. Nor do their officials
find themselves competent to talk to general managers
at enterprise level, where the discussion will deal
with real life and range over finance, production,
distribution, supply, leasing, fuel costs, and employee
relations. A crucial concern for all employees for
the future is superannuation: few union officials would
be able to talk about it sensibly. More, but perhaps
not many, industrial relations managers would be able
The CTU is alarmed about its finances. The Government
Review of trade union paid education leave and the
$2M per annum the taxpayer unwittingly pays to supports
its organisation is being given a range of compelling
reasons to perpetuate this patronage. Probably not
mentioned is the fact that TUEA (the Trade Union Education
Authority) with its 25 employees is a rent paying tenant
of the CTU's building: thus the taxpayer supports the
As unions shrink so will their resources and so will
their capitation fees to the CTU. Not all unions will
suffer: the energetic and enterprising will survive.
Nonetheless, diminution is generally imminent.
The CTU is also alarmed at the likely change to its
nature. It has enjoyed having State-secured political
clout. Its officials don't look forward to heading
up a collection of organisations of bargaining agents,
commercially motivated to attract members by the services
they can offer, a kind of workers' chamber of commerce.
To the CTU's previously powerful politicians that prospect
Ken Douglas, President of the CTU, in his description
of the legislation has called it the Pol Potisation
of the union movement. It is a vivid if unlikely coinage.
Probably most of his audiences have forgotten who Pol
Pot lamentably is. However, the expression conveys
his disapproval. He has visited Australia at least
twice to warn the ACTU of what the Liberals might do
if they are elected. (Opponents of the Greiner Government's
legislation damned the New Zealand precedent.) No doubt
the ACTU will feature Ken again closer to the next
Australian Federal election. He has also called the
legislation 'unworkable', a comment echoed by the Law
Society in relation to Tribunals.
The Labour Party's talk of a negotiated economy is
obviously a pitch for the continued support of the
unions. Labour's nature will also be drastically amended
by the legislation's effects. Their individual members
are aging. They do not attract the young. Union financial
and organisational support are essential for Labour
in its mauled and diminished parliamentary condition.
(So reduced were they after the last election that
they invited defeated former MPs to supplement caucus
meetings.) A shrinking union movement will infect a
struggling Labour Party, an unwelcome contagion.
Douglas' Australian anathemas have not been widely
reported in the news media. After a few measly examples
of 'exploitation' in headlines, nothing bad has happened.
The media don't want to know about anything good.
The result has been---silence. The fury and
the shouting that preceded the Act's passage have died.
No one has thought to suggest that if legislation
is genuinely harmful the fuss increases, not disappears,
after it is enacted.
The National Party, for its part, is sitting tight,
unwillingly listening to employers' complaints, and
probably the union's as well, and hoping it will all
come out well in the wash. They will not rush to amend
what has recently been passed, but they are saying
they will keep an eye on it. Many of the Government's
members did not understand what they passed: reports
are common of confused conversations with individual
members. For all its faults, however, and its mysteries
to some of its own supporters, the legislation has
made possible major change. Much is already occurring.
And it is taking place precisely where it should,
in workplaces or enterprises, where employers and employees
are talking to each other and making sensible and novel
decisions, to their mutual benefit.
Why should talking to each other be new? Surely managers
and managed have always been able to do that?
They have been able to, and they have done so. Companies
have worked hard to develop effective communications.
But there's an element of make-believe in discussions
when central features like wages (to the employee)
and wage costs (to the employer), together with terms
and conditions of employment, have been decided elsewhere
by a remote group of people very likely with no connection
to the workplace. And the terms and conditions of
employment are actually restrictions: they specify
what may not be asked or expected and the added cost
of asking if the employer has to.
With all these factors given and unassailable, a key
part of the discussion loses its point, namely the
question, "If I modify my behaviour how will that benefit
me" To provide benefit an employer must contemplate
a second tier of wage costs.
Now, however, everything is on the table. Changes
can be immediate, once agreement is reached. There
is new urgency and realism in communication.
This has placed greater demands on everyone. The
manager must know his business and be able to communicate
it. The employee has to identify clearly what he wants
to know. We should assume that that will be, quite
simply, everything. And why not? Very few items will
be so delicate that they can't be told.
What this change emphasises is that this communication
can only sensibly take place at the worksite or enterprise
level. Beyond that we are forced to deal with generalisations
and the political agendas of players in the system.
Enterprise level communications focus on what develops
common interest, not what divides.
Employers have reacted enthusiastically to this change.
The enthusiasm has surprised some. The manager of an
employers' association remarked that it was "astonishing
how employers have grabbed the chance to make changes."
In fact it would have been astonishing if they hadn't.
The changes in some cases are years overdue.
The pressure for full, rounded communication has highlighted
the role of the general manager and diminished the
role of the industrial relations specialist. By and
large, industrial relations specialists are incapable
of discussing business in the round, just as union
officials are. Employees, on the other hand, deal with
all aspects of business and want to talk about them.
The only person who can answer all the questions, discuss
all the plans, is the general manager. So, at last,
general management is regaining responsibility for
labour relations, just as it is responsible for other
aspects of the business. The ludicrous specialisation
in industrial relations which characterised business
in all of our working lives is going to disappear,
and the general manager will, for the first time for
most, become more completely general.
The legislation is also on the way to achieving a
real change in mind-set: people must now consciously
decide to opt into contracts. They are not gathered
willy-nilly because some union wants them herded that
way. They don't have to buy their way out; they can
decide to be out, and that's it. They can decide to
be in: it is a positive decision. Such deliberate voluntarism
will help breed a much more active attitude to change.
The process of self-determination will lead to greater
interest in the quality of the product: discussion,
Enterprise contracts, drafted by general managers
and employees, will still be contracts, enforceable
in the Employment Court and capable of creating significant
liability. Many employers are turning to lawyers to
ensure that contracts say exactly what they want. This
has thrown up a new need to manage the suppliers of
legal advice. In New Zealand some of the legal profession
retains astonishing delusions still: some firms refuse
to divulge charge-out rates, for example. Managers
are becoming bolder at puncturing these pretensions
and monitoring legal costs and performance like any
Now that the scene is set what are the parties to
enterprise level negotiations achieving? Why is it
so worthwhile, and not merely an ideological break
with the past? Some examples illustrate the practical
- One company recently discovered potential
savings in electricity charges of $2M per annum. It
meant they would have to change their work week from
Monday to Friday, to Friday night through Sunday night.
The employees were persuaded to change by payments
that took a good slice of the $2M.
- Even so, the company is now saving $1.5M+ per annum.
Previously, under a clutch of national awards, such
changes to the hours of work would've been impossible,
and in any event union policies would probably have
- Similarly, archaic penal rate provisions
are being jettisoned. Most of them were established
in the days when the weekend was genuinely different
from the rest of the week and no one was abroad on
any night once the movies ('the pictures' then) were
over. Times changed but labour practices didn't, or
if they did they were so costly that the costs provoked
evasion. People are now accepting that 'ordinary hours
of work' are sometimes necessarily extraordinary and
that to get and keep the business available an employer
should not have to pay extreme rates that originated
in another quite different time.
- Other flexibilities are being promoted by employees.
The old five day/eight hour per week is not universally
attractive. Where it's possible people are often keen
to work four days, ten hours a day, with a three day
weekend. The ten hours are paid for at ordinary rates:
and everyone has a three day weekend every week.
- In the meat industry one employer refused
to make a company-wide agreement. The union demanded
it and previously could have used the structure of
bargaining against him. He communicated well and his
employees at one plant separated themselves from his
other plants, as he had sought.
- It is likely the old style Metal Trades Award
will disappear. Its place as a trend-setter is gone.
The 'wage round' will disappear. Negotiation and
settlement dates are diffused, geographically and chronologically.
Wages become an aspect of business, not a political
- A building materials company with several
quarries has negotiated separate contracts for each.
Previously a general award would have covered all,
and union policy would have determined the result.
The union opposed the separate contracts: the workers
instructed the union to accept them.
- At last employees are taking control of their own
destinies and their own union organisation. This is
a real change: unions may well exist in future to
serve their members rather than the political ambitions
of many of their officials.
The fact that our economy is struggling and that we
have to make cost-saving, productivity-enhancing changes
is hastening acceptance of the new environment. It
may not have been possible if we were still dozing
through the cost-plus days. A new sense of urgency
is abroad. We're becoming leaner, at long last.
There's a gathering recognition that the rest of the
world will not wait.
Where that recognition comes to employer and employee
at the same time immense change and mutual benefit
are possible. The new legislation doesn't prevent employees
from hiring assistance for negotiations through traditional
employee organisations or free-lance bargaining agents.
It does, however, recognise that people who are mature
enough to marry, fight wars, build houses, build communities
and create children and care for them are also mature
enough to talk sensibly and reasonably about the central
feature of their lives previously delivered to protected
specialists---their work. It should surprise no
one that the chance is being welcomed, and the task
is being performed extremely well.