New Zealand officials opposes Labour’s Fair Pay Agreement proposal

New workplace minister Michael Wood is pushing forward with the FPA plan to set “floors” for employment conditions across entire industries which employers cannot opt out of. 

However, the Ministry of Business, Innovation and Employment (MBIE) has instead recommended the plan be dropped in favour of strengthening existing employment laws and having targeted interventions in sectors with bad employment incomes. 

“MBIE’s preferred option in the Regulatory Impact Analysis we have prepared is to strengthen existing mechanisms in the employment relations system, combined with setting targeted sector-based minimum standards where there are problematic outcomes for employees,” an MBIE paper said. 

MBIE’s argument was that the plan comes with a number of “significant risks”, most notably that employers were against it, the law would be “complex, novel and lacks specific international precedent”, and that it could breach international labour or human rights laws. 

In addition, implementing such a plan is “likely to result in bargaining stalemates and determinations fixing terms by the Employment Relations Authority, so the added benefit of bargaining may be limited.” 

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MBIE also argued that FPAs would reduce employers’ motivation to innovate, increase productivity and competitive edge. MBIE estimated that FPAs could result in up to NZ$600 million (US$418 million) in extra wages for low-paid employees which it believed may be passed on to consumers, according to Stuff.