Changes of government often entail less change than people expect.
When Jacinda Ardern came to power in 2017 she did not renationalise the power companies John Key had partly privatised, or immediately force agriculture into the emissions trading scheme. When Key came to power in 2008 he ended up increasing and building on Helen Clark’s working for families programme, which he had previously called “communism by stealth”. And when Clark was elected in 1999 the major rightward shift enacted in the 1980s and 1990s largely survived.
New governments find it hard to really tear up changes that their predecessors have managed to bed in. The public service has a bias towards the status quo and the public generally don’t like the expense of radical shifts to existing policies. This is the case both for physical infrastructure projects (no one wants to stop work that is already under way and tear up contracts) and for complex policy programmes such as KiwiSaver or working for families. Too many people were already getting serious gains from these policies by the time Key was elected for him to get rid of them.
There are exceptions, however, and we look set to see one next year if the opposition National party win office, an outcome several polls are now predicting.
On Wednesday night Labour finally enacted one of its promises from the 2017 election, passing fair pay agreements (FPAs) into law. Despite not attracting all that much coverage, FPAs are the most consequential change to employment law in decades, significantly shifting the balance of power from employers to employees, and bringing New Zealand’s system much closer to Australia’s “modern awards”. National are absolutely dead set on repealing them.
These FPAs are essentially collective agreements struck not between a union and a single employer, but a union and every employer in an industry. Employers cannot walk away from this bargaining completely, as if they do the Employment Relations Authority can simply impose terms on all employers in the sector. Workers lose their ability to strike while negotiating such an agreement.
The idea is not that every employee in the country will suddenly be covered by an FPA, but that a floor for pay and conditions can be set in poorly paid industries with low union membership, particularly those where contracting and subcontracting make working out who actually employs who a nightmare – think security guards and cleaners.
Most agree the law will at least in the short term deliver more money for workers, even those who despise it and think it will do serious harm to productivity and the economy. The official advice on the bill the government got from public servants – who told them not to pass it – suggested it would result in up to $600m of extra pay for workers. The head of employer lobby group the Employers and Manufacturers Association made the mistake of putting the phrase “Our concern is that FPAs will result in higher wages,” in a press release – something the union movement seized on, even if the rest of the sentence was “which would lead to layoffs and businesses closing up shop”.
This is manna from heaven for those on the left and in the union movement who wish Labour would throw off the shackles of milquetoast centrism and deliver real class-based politics and policies. Finally, here is a real fight between capital and labour, between workers and bosses, where the party can fight for the actual working class, not middle class urbanites who want more bike lanes. It helps that the workplace relations minister, Michael Wood, a former unionist himself, clearly enjoys the fight with the business lobby, and is across the detail of this very complicated law well enough that he could happily factcheck attacks on it for hours.
But Wood himself knows that the only real hope for FPAs changing things for good is that Labour wins the election next year.
The government took a long time getting FPAs ready, obviously worried about charges that it was rushing through such a big law. It could blame coalition partners NZ First for this in its previous term, but it also took a very long time trying to design the law in partnership with the business lobby, despite the fact they were simply never going to accept anything close to FPAs. (Labour likely knew this, but felt it had to be seen making an attempt.)
Now with just one year left of this term, it’s likely that very few, if any, FPAs will be struck before the election. The business lobby group that was expected to bargain with the unions has decided to simply boycott the process, clearly playing for time in hopes National will win and remove the headache. Other employer groups which were expected to step in are also dead-set against the law, so will try to gum up the works too.
This is a calculated bet on National winning. It’s notable that the boycott was announced just after Christopher Luxon became leader of National, reawakening the possibility that the party could prevail in 2023. Three more years of Labour in power would mean long enough for several FPAs to be worked out and forced on employers who refuse to negotiate – and likely enough inertia in the overall system that National would find it hard to tear it all down when it inevitably won in 2026, perhaps instead putting a pause on new FPAs but not deconstructing the ones already in place.
FPAs are unlikely to feature as a major component of the election campaign next year, as the policy is too complicated for easy slogans and it will be too early to see if they will have any real effect on individual worker pay or the wider economy. Like other centre-left parties around the world, Labour’s ability to call on real worker solidarity has faded as union membership has fallen and culture war issues have taken over. And National has far simpler targets to focus on, like failed infrastructure programs, tax cuts, and the cost of living. But there is no issue where a National win would tear up quite as much of Ardern’s legacy as this.
Henry Cooke is former chief political reporter for New Zealand news organisation Stuff
