Current pay and reward system working well

In News6 MinutesBy Nick LeggettJune 3, 2022

We cannot afford to return to a pay setting system that undermines certainty for employees and employers alike, that imposes rigidity around what someone can be paid, irrespective of experience, skill or hard work.

New Zealand has moved on from the kind of regimentation that is proposed in the Government’s Fair Pay Agreement Bill. Our sense is that workers in the trucking industry want to keep the flexibility and freedom of direct individual negotiation that they have enjoyed for over 30 years.

With business confidence low and an economy creaking under the dual pressures of high inflation and rising interest rates, could there be a worse time to impose a cumbersome, labour-intensive, costly collective bargaining system of monumental complexity on our country? Probably not, but the Government has chosen to do it anyway as it seeks to push this archaic legislation through Parliament.

The concept of Fair Pay Agreements (FPAs) is similar to the old national awards system that helped to hamstring New Zealand’s economy until 1991.

A fair-pay agreement will mean everyone’s pay being set across a whole industry, with everyone in the same role basically paid the same. This means for our industry, all drivers paid the same, all dispatchers paid the same, all managers paid the same, etc, etc. An outstanding staff member who works hard and is dedicated to the company must be paid the same as someone who does the job but gives the bare minimum. It won’t be possible to recognise people’s individual skills, experience and strengths through remuneration any longer.

We are concerned that the very nature of our industry – fast, responsive to customer and supply chain needs – will be put in jeopardy.

We are an industry that relies on people. They are the lifeblood of what transport companies do. Only around 7% of them choose to join a union because, presumably, they are satisfied they can negotiate for themselves with their employer. Inserting unions into the picture to set their pay and conditions across the country has not been requested, and nor will it be welcome.

This one-size-fits-all approach to industrial relations has been promoted as a solution to the ‘race to the bottom’ in wages and conditions in highly competitive industries such as cleaning, security and food retail. My question is, why not deal with those industries individually and examine the structural reasons that exist for poor pay and conditions? The construction accord is a classic example of where specific challenges can be addressed and overcome through good partnership. The Government has done a good job in leading this, so why not start a similar project with other industries, including transport, as we have previously requested?

FPAs will do little or nothing to improve productivity and will probably result in a significant increase in employment disputes and litigation. As New Zealand looks to recover from the restrictions of the pandemic and overcome our current economic struggles, we can ill afford this kind of backwards-focused experiment.

FPAs will certainly not deliver the kind of benefits proponents claim. History demonstrates that increases for workers covered by national level agreements are necessarily conservative in order to ensure that most, if not all, employers can afford them. Workers will then need to wait at least three and as long as five years before being able to negotiate another increase. That simply won’t be fast enough, given the inflation and cost of living increases Kiwis are experiencing now.

Trucking companies up and down the country are increasing wages for their hard-working staff now. Why would we want to hand over the ability of an employer to compensate for inflationary pressures through their staff’s pay packet, or reward them for their performance at work? Why should that personal discussion between an employer and an employee be delegated to a faceless group of individuals? Why should an individual business owner be so disengaged from how much they pay their staff?

As the key industry body of the road transport industry, a significant industry within the New Zealand economy, Transporting New Zealand is under-resourced and frankly inexperienced, in terms of needing to negotiate on behalf of our industry. No adequate provision is made in this Bill for the hundreds of thousands of dollars that we believe it would cost us to negotiate an FPA on behalf of transport companies. The time and resources are better spent investing in attracting and training new entries into our industry. Through our traineeship, Te ara ki tua Road to success, these trainees start on a livable wage and have a guaranteed job.

Kirk Hope, of Business New Zealand, has said that “being treated the same isn’t the same thing as being treated fairly.” In fact, the regimented sameness that is the basis of this Bill, is a recipe for unfairness and resentment.

By Nick Leggett, CEO, Ia Ara Aotearoa Transporting New Zealand.