HomeNEWSConcerns raised over Fair Pay Agreement

Concerns raised over Fair Pay Agreement

The Fair Pay Agreement Bill is currently in negotiations before the select committee as they decide whether to make it mandatory.

First introduced to parliament on March 29, 2022, the Fair Pay Agreement works to unite employers and unions within a sector to bargain for minimum terms and conditions for all employees.

The bill is set to provide a framework for “collective bargaining for fair pay agreements across entire industries or occupations, rather than just between unions and particular employers”.

In front of the select committee, evidence opposing and for the bill have come forward as they create amendments before the second reading.

However, many business associations have raised concerns against the Fair Pay Agreement, expressing how it will affect the industry.

Greg Harford, Retail NZ CEO, says the Fair Pay Agreement in general is “bad law based on a faulty premise and should not proceed”.

Harford says that the Fair Pay Agreement comes following the argument that workers are not paid enough and the need to drive higher productivity, but he says there are already government levers in place to deal with these issues.

“If there are concerns with particular sectors or particular employers, our view is that the government should use its existing levers.”

Read more: Words of wisdom from Retail NZ CEO Greg Harford.

He also believes the Fair Pay Agreement will affect the retail industry by causing price increases for consumers, aggravating the already existing living cost and inflation crisis as retailers grapple implementation costs, increased hourly rates, and costly penal rates.

“This bill will likely lead retailers to increase prices, look at reducing store hours and drive automation to replace jobs,” he says.

In research held by Retail NZ surveying 1000 New Zealanders, 75 percent are concerned about price increases, 63 percent are concerned about the surcharges from the agreement, 60 percent are concerned about freight cost increases for online shopping and 49 percent are concerned about reduced store hours.

Greg Harford.

Retail NZ is calling on the government to ditch the Fair Pay legislation. This legislation must be rejected, based on the majority views of submitters, impact of industries and the views of New Zealanders about the control they want to have on their own employment contracts.”

On the other hand, Annie Newman, Assistant National Secretary of E Tū union, who has been campaigning for a Fair Pay agreement for over four years says this bill will work towards protecting the “most vulnerable workers in the country”.

“For us, it will signify a huge step for working people. We think what is being discussed creates the foundation for essential new law to address work poverty,” she says.

“This new framework will allow a way for businesses and union on behalf of their sectors to work on the relevant minimum standards to ensure everyone is better off.”

Newman says the legislation will also improve the local business, whole community, and their sectors.

There is still improvement that needs to be put in place she says, with the category of contact workers not being covered in the Fair Pay agreement.

But Kirk Hope, BusinessNZ CEO, says that the most vulnerable workers such as cleaners will not be covered by the current Fair Pay Agreements as they are deemed contractors not employees.

Hope agrees with Retail NZ CEO Harford against the bill saying that countries such as Italy, France, Germany and Belgium are moving away from the model due to stifled productivity and poor economic outcomes.

“Compulsory Fair Pay Agreements are unlawful under both current domestic and international employment laws and are totally out of step with how we need to work in 2021,” he says.

“They aren’t needed, they remove the flexibility and autonomy of modern workplaces and won’t improve pay and conditions for hardworking Kiwis.”

The report for the Fair Pay Agreements Bill is due on October 5, 2022.

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Bernadette is a content writer across SCG Business titles, The Register and Idealog. To get in touch with her, email bernadette.basagre@scg.net.nz