Government introduces Fair Pay Agreements

The government has introduced the Fair Pay Agreements (FPA) Bill to Parliament, according to Workplace Relations and Safety Minister Michael Wood on Tuesday, despite opposition from business groups on the scheme.

"Fair Pay Agreements have long been one part of our wider work programme focused on lifting the wages of those on low to medium incomes – ensuring better wages for employees is even more essential now as we begin to feel the global economic pressures caused by the war in Ukraine," said Wood in a statement.

"These agreements will improve wages and conditions for employees, encourage businesses to invest in training, and level the playing field so that employers who are trying hard to offer fair terms don't get undercut and disadvantaged."

According to Wood, the FPAs would also provide bargaining power to cleaners and bus drivers so they can negotiate better wages and conditions.

These FPAs, however, have been criticised by businesses in New Zealand, which said implementing the scheme "does not recognise the reality of modern workforces and the current environment in which they operate."

Wood, however, said that the government recognises that a balanced approach is needed so the FPAs are designed to allow unions and employer associations to bargain together to set minimum standards.

"These negotiated, sector-specific minimum standards can take into account the costs and opportunities businesses have while ensuring more workers receive higher wages and better employment terms and conditions," explained Wood.

"FPAs will be a long-term, stable framework with Agreements being for three to five years, meaning that employer associations and unions can identify the most critical issues in their sector and then negotiate a staged approach to making improvements across the sector or occupational group."

According to Wood, the changes will help employers by encouraging competition that is not based on low wages but on better products, services, and innovation.

Read more: BusinessNZ turns down government offer on FPAs

'BusinessNZ says no'

In a brief response to the government's introduction of the FPA Bill to Parliament, BusinessNZ issued a media release titled: "BusinessNZ says no."

Chief executive Kirk Hope maintained that the association will not join the scheme, which he said is "unacceptable."

"The Bill shows the Government is not listening, and we think the legislation should simply be canned," said Hope. "The scheme would make it compulsory for businesses to take part in collective bargaining, and compulsory for them to accept union demands or imposed arbitration."

Under the bill, BusinessNZ would be receiving $250,000 a year for supporting compulsory bargaining in major economic sectors.

The association, however, asserted its rejection on the scheme.

"The FPA scheme would be deleterious to the economy, to people's prosperity, and to the human rights of those involved, and despite the mention of BusinessNZ in the Bill presented to Parliament today, I can confirm that BusinessNZ will definitely not be taking taxpayer money to support compulsory national pay schemes."

The government's media release said the FPA bill will go through a full Select Committee process and is expected to pass all stages this year.