MPs have been told fair pay agreements would see an end to bosses telling lowly-paid workers asking for a pay rise, if you don’t like it, there’s the door.
The Government is working to pass its Fair Pay Agreements (FPA) Bill, which will allow negotiations for minimum pay and conditions across entire sectors, like commercial cleaning, security, retail and hospitality.
At a hearing of the Education and Workforce Select Committee in Auckland on Monday, unions claimed fair pay agreements could start to reverse a widening gap between rich and poor.
But employers’ representatives said fair pay agreements would harm the economy, and would have hampered businesses’ ability to bounce back after the hit the economy took from Covid-19.
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Callum Francis, national organiser from First Union: “We have seen the gap between rich and poor expanding by exponential levels.”
Lower-paid workers could be told by employers: “If you don’t like what we are doing, there’s the door. We will hire somebody else, and they will work harder than you do”, Francis said.
This dynamic had led to standards of living falling for lower-skilled workers, and fair pay agreements could help reverse this, he said.
“It will remove some of the humanitarian crisis we are going through,” he said.
But Alan McDonald, head of strategy advocacy at the Employers and Manufacturers’ Association, said: “The race to the bottom is a myth, it’s not happening.”
With a tight labour market, many employers were offering large pay rises.
He said one factory owner he knew was offering $27 an hour for starting workers.
A “straw poll” of EMA board members’ businesses indicated pay rises were landing at about 4% to 6% in larger businesses, and about 8% in smaller businesses, he said.
He warned the Government it was taking a step back to a form of centralised bargaining.
“In a small country like ours, you need to be fast-moving and flexible. This is reducing adaptability and flexibility,” he said.
Union representatives told MPs about “dodgy casualised” employment practices which lower-paid workers, often young, could not push back against, but which fair pay agreements could outlaw.
This included hospitality workers given start times for shifts, but no end times.
“Not having end times is a very common practice in this industry,” Hospitality worker Xavier Walsh said.
If there were plenty of customers, then the worker had to stay on until no longer needed, Walsh said.
But, if there were too few customers, the worker was sent home.
While unions have orchestrated a campaign in support of fair pay agreements, business associations have organised against them.
Businesses that had written to the Government in a bid to stop the Fair Pay Agreement Bill included supermarket cooperative Foodstuffs, owner of Pak ‘n Save and New World, which claimed it would push up costs for employers and feed through to higher prices.
Sarah Hallie, head of people, culture and wellbeing at Good Spirits Hospitality, which owned 10 pubs in Auckland and Hamilton, told MPs prices were already near a “tipping point” where people just chose to stay home, instead of going out.
In 2019, Good Spirits pubs charged $9 for a bottle of Heineken, she said. It now charged $11.
“In the next few months, we are going to have to increase that,” she said.
She said impositions through fair pay agreements such as Sunday penal rates, which unions have pushed for, could threaten the viability of businesses.
“We might consider closing on Sundays, rather than making a loss,” she said.
Equal Employment Opportunities commissioner Saunoamaali’i Karanina Sumeo, told MPs that fair pay agreements supported fundamental human rights, including the right to a decent standard of living.
But she said there were gaps in the bill, including ensuring employers could not contract out of fair pay agreements by pretending workers were “contractors”.
“I’m thinking of a young Pacific man who’s an apprentice. But when I saw his contract, he was being treated as a contractor,” Sumeo said.
“If we want to lift labour outcomes, we have to look at the people with the least bargaining powers.”
But Jeremy Sole, Electrical Training Company chief executive, told MPs apprentices should be excluded from fair pay agreements, or fewer businesses would be willing to train them.
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