Fair Pay Agreements Bill passes third reading

Despite the opposition of employer groups, the New Zealand Parliament passed on the third reading the Fair Pay Agreements Bill this week.

"Today marks a significant step towards creating a more productive and inclusive economy, where all employees share the benefits of economic growth," said workplace relations and safety minister Michael Wood.

According to the minister, the FPAs will improve employment conditions by enabling employers and employees bargain collectively for industry- or occupation-wide employment terms.

"By increasing bargaining coordination to agree minimum employment terms within a sector, outcomes for vulnerable employees will be improved and we will see growth in the incomes of New Zealand employees," said Wood. "This is especially the case for Māori, Pacific peoples, young people, and people with disabilities, who are over-represented in occupations which will benefit from a Fair Pay Agreement."

Read more: BusinessNZ turns down government offer on FPAs

The minister added that it will also help businesses by "levelling the playing field" so employers who are trying hard to offer fair terms to employees won't be put at a disadvantage. The passing of the FPAs Bill fulfills the election promise of the government to lift wages and improve the working conditions of workers.

"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 tackle global headwinds," said Wood.

The New Zealand government said the FPA system will take effect on December 1, when more guidance will be provided for employers, employees, and bargaining parties.

Read more: ILO calls for minimum wage adjustment amid cost-of-living crisis

Parties, unions react

In Parliament, the bill was passed with the support from the Labour, Greens, and the Te Pāti Māori. The National and ACT, however, opposed it. In a previous statement, the National Party said the bill is an "ideological overreach" that will harm the economy.

"We all want higher wages and better conditions - especially during a cost-of-living crisis. But the only sustainable route to higher wages is more productive businesses. This Bill will harm productivity," said Paul Goldsmith, National's Workplace Relations & Safety spokesperson.

"Fair Pay Agreements will make New Zealand’s workplaces less agile and flexible and make all workers beholden to a union agenda. It will force employers and workers within a sector to bargain for minimum terms and conditions for all employees in that industry or occupation, regardless of whether or not they want to be included."

Read more: ILO backs New Zealand's 'Fair Pay Agreement' proposals

Meanwhile, unions hailed the passing of the FPAs, calling it a "new era for workers' rights."

"This is a truly momentous occasion. We are reversing 30 years of a failed policy that was part of the Employment Contracts Act. Working people across the motu will now be able to have a greater say in the terms and conditions they receive," said Richard Wagstaff, president of the New Zealand Council of Trade Unions.

Louisa Jones, FIRST Union Assistant General Secretary, also said the bill's passing puts New Zealand on track for a "fairer and more prosperous future."

"FPAs pave the way for a rebuild of some of our most critically undervalued industries, and complement our wider goals of reducing inequality, upskilling New Zealand workers, reducing regional wage disparities and returning a fairer share of company profits to the workers who created them," said Jones.