Speech, 23rd Annual Premier Industrial Relations Conference
March 3, 2009
Auckland

 

Good morning.

I remember quite well speaking to many of you at this same conference last year as the Opposition Labour spokesperson. How things have changed since then. Last year, I spoke about what National would do on the employment and industrial relations scene if it was elected to Government. I don't need to worry so much about hypotheticals these days, as you well know. Rather, I can tell you about what this Government will do and has already done.

It is quite fitting that this conference falls in the exact week an important piece of new legislation - the 90 Day Bill - takes effect, and I will speak more on that later. It is also quite timely that we are gathered immediately after the Prime Minister's Jobs Summit, which was an incredibly challenging and stimulating initiative to be involved in. It was great to see unions and businesses working together to get through these difficult times.

Job Summit
We are in a very serious global recession that is going to get worse before it gets better. To get through it will take a fair bit of pragmatism, goodwill and flexibility on everyone's part. The challenges we face as a country are not challenges that can simply be overcome by throwing cash around, particularly if you have to borrow to spend. Talking ourselves into a depression isn't exactly going to help either. So thankfully Friday's Summit wasn't a conference where you only sat and listened. It was an opportunity to seriously get involved and thrash out real, credible ideas that can positively impact our workforce and economy. Clearly not everyone who wanted to come could, but there was still an opportunity for those people to push forward any ideas they had, and many did. From the Government's perspective, the Summit produced a lot of good initiatives. We have a structured process in place to ensure they are evaluated, and where effective and practical, put in place.

No doubt everyone here took stock of the ideas that emerged, including the nine-day fortnight and the joint investment fund with the Government and banks as partners. These sorts of ideas have merit and we will thoroughly investigate them to see how they might be best implemented. I'm not in a position today to offer an insight as to if or when these ideas will be introduced.

I have already read and received feedback on the nine-day fortnight proposition and some valid points have been raised. Some people might not want to, for financial or other reasons, forgo a day's work. But if a business is truly in trouble and needs this option to maintain staff levels, then surely nine days work is better than none. It certainly warrants investigating and I would hope all sides of the debate can work toward solutions rather than search for reasons why it won't work. As you may realise the Prime Minister has said it is likely not possible for the Government to fund the tenth day's wages 100 percent. But there are other options available and for many, an opportunity to up-skill will be welcomed.

One of the key reasons for holding the Job Summit was getting people to focus not just on what the Government can do, but what different sectors, different organisations, and different businesses can do to maintain and generate jobs. This Government is willing to work with a wide variety of people and organisations, and just because the Summit has come and gone it does not mean we have stopped listening. If you do have new ideas, or thoughts on how the ones already made public can be implemented, then I encourage you to speak up.

Training opportunities are important and we are keen to fast-track the Youth Guarantee scheme, as was suggested at the Summit. The programme is a significant plank in our plans to up-skill New Zealand's teenagers, particularly those who do not learn as well in an academic environment. The Youth Guarantee scheme allows 16 and 17-year-olds free access to a study programme in or out of a school setting. We are entering a period where there will be fewer jobs for lower-skilled school leavers, so this will provide options for young school leavers to study at polytechs and private training establishments.

Employment Law
When it comes to employment law, this Government believes flexibility is crucial. Good employment law should dovetail neatly with a growth-friendly business environment, while ensuring fairness in the employment relationship. With the economy in unknown territory, we must focus on means to not only preserve jobs, but help workers into employment. The introduction of a 90 day trial period will provide a boost in this regard. In developing this legislation we wanted to make sure that it would assist those on the margins of the workforce who might struggle to get a shot at a job they are entirely capable of performing.

Trial periods are not a new phenomenon; they are used successfully throughout developed nations and are commonly six or 12 months long. They are also often mandatory. We have looked at the legislation around the world and moved to implement the 90 day voluntary trial period for small businesses because it is the best option for New Zealand. The 90 day trial period is designed to provide small businesses with the confidence to take on employees in uncertain economic times and promote labour productivity over the long-term. 

As most of you know, it means that businesses that employ 19 or fewer employees may agree with new employees to a trial period of up to 90 days. The trial period will allow parties to evaluate the employment relationship and to terminate that relationship if it is not working out, without risking a costly, time consuming personal grievance action. The legislation is clear that a trial period is voluntary, and it was always envisaged that skilled workers would not agree to it and in many sectors will not even be asked to.

A wrong employment decision can cripple a small business, so employers can be very reluctant to hire, particularly at a time when economic confidence is low. Through this legislation the Government is giving small businesses the confidence to take a chance on expanding their workforce or hiring someone they might not otherwise be willing to look at.

A key aspect of the legislation relates to people on the benefit, as we were well aware that they could be reluctant to accept a trial period if it meant they faced a stand-down period to go back on the benefit in the event a job didn't work out. So we removed that stand-down period and while we're confident most workers will back themselves to step up to the requirements of a new job, they have that added assurance that they won't be in a worse-off position financially no matter the outcome.

There are significant safety mechanisms in place to protect workers from exploitation by unscrupulous employers. These include the right of employees to seek a personal grievance on discrimination grounds and the requirement of employers and employees to act in good faith. I should probably emphasise that we do expect employers to act in good faith in all aspects of an employment relationship and I know by far the majority of employers already do. I am confident we have got the balance right in this legislation and employers who do attempt to abuse employee rights will find no comfort in this law.

We welcome the CTU campaign to name and shame unscrupulous employers who try and flout the law, as long as the campaign doesn't expand to law abiding businesses that are trying to survive and giving new employees an opportunity to get on the employment ladder.

Given this is brand new legislation, we are obviously very interested in what impact it will have on employment. I will be monitoring it closely to see how it is used and what workers and industries benefit from it. The unions, too, have said they will be keeping a close eye on progress and I hope that if an unscrupulous employer does attempt to abuse the law we can work together to address the problem.

Holidays Act 2003 Review

The next stage of our programme addresses concerns experienced by employers in complying with Holidays legislation.

This Government is aware that businesses have experienced increased compliance costs in applying some parts of the Act, especially the calculation of relevant daily pay.

Over time, many issues have arisen that required resolution in the Courts. This, in my view, is an unsatisfactory situation. Lack of clarity in holiday provisions has a negative impact on employment relationships and the labour market, because employees and employers have to waste time and resources trying to establish what their rights and obligations are. 

The legislation must also be more easily able to accommodate increased diversity in working patterns. Some thirty-five percent of people work outside of the standard 7 am - 7 pm, Monday to Friday working week. Holidays legislation must be better able to cope with these changes in working patterns.

This is why I intend to establish a working group to review the Holidays Act and identify areas for improvement. Both Business New Zealand and the New Zealand Council of Trade Unions will be on the working group.

Reviewing relevant daily pay to make it easier for businesses to calculate and administer will be a particular focus of the review. Current practice in calculating relevant daily pay is horrendous. As some have described it, the sums required to work out what relevant daily pay is often end up looking like the blackboard equations from a Beautiful Mind. Clearly, this is not a satisfactory system by any means and it needs to be fixed.

Allowing employees the flexibility to trade in their fourth week of annual leave for cash will be another area of the review. A 2007 survey pointed out that since the introduction of four weeks' annual leave in 2006, the average number of days of untaken leave per employee had increased from about seven days to about 14.

We intend on giving employees the choice to trade in their fourth week for cash - the emphasis being that it is the employee's choice. Only the employee can seek to make the trade upon agreement with their employer, and can not form part of the original employment agreement. A business that can't afford to pay the extra cash can simply say no.

The legislation is aimed to help out workers in busy industries who simply don't feel they need a fourth week's holiday, or would prefer to have a bit of extra cash in the hand. If the statistics are accurate, this will likely be widely welcomed. Employers often struggle in particular seasons with low staff levels and the opportunity to maintain productivity through workers who are happy to trade in a week's holiday is certainly beneficial to them too.

There is nothing in this change that will force either employees or employers to partake in it and concerns that employers will attempt to bully their staff into making the trade are exaggerated. I have every belief that New Zealanders are capable of making their own decisions and should they feel undue pressure they will speak out or ignore such pressure. This is a choice, and early feedback has been very positive.

The terms of reference for the Holidays legislation are being worked through are in the process of being finalised now.

Unions and Collective Bargaining

Moving to unions and collective bargaining, our pre-election manifesto included two commitments that relate to union activity. The first matter concerns union access to workplaces with the employers' consent, which cannot be unreasonably withheld. The second matter concerns restoring worker's rights to enter into a collective agreement without having to belong to a union. 

Requiring employer consent, which cannot be unreasonably withheld, to union access to a workplace improves the level of fairness to employers. It is fair that employers know who is on their premises and for what purpose. To be clear, we are not advocating that union representatives can only visit union members. When they are given access to a workplace, who they talk to is entirely their business.

It is only fair that workers' rights to freedom of association and representation are not inhibited, particularly for those who may not be aware of their relevant union. So employers must comply with reasonable requests from unions to access work premises. I expect common sense will prevail, and I ask all employers to work with union representatives, not against them.

Enabling workers to enter into a collective agreement without needing to belong to a union is another proposed change. It is essentially a common sense approach for workers who aren't affiliated to a union, and don't wish to be, to have the ability to negotiate on the same grounds. The 2008 union membership return showed there are a number of very small unions, which suggests to us that many small groups of employees want to enter a collective agreement but are being forced to go through the rigmarole of being a union to enjoy this right.

Dispute Resolution

Dispute resolution is another common concern for both employees and employers. As a Government, we are committed to promoting mediation as the primary problem-solving mechanism. This can be through mediation services provided by the Department of Labour, which completes around 9,000 mediations a year, three quarters of which reach a settlement. A private mediator is also an option and has proved successful in many cases. We have committed to ensuring adequate resources for the Mediation Service, with properly qualified mediators, as per our election policy. There are also concerns about the perceived and actual independence of the Mediation Service and I am considering ways to enhance their independence.

Changes I plan to make are around the Employment Relations Authority so that it acts in a more judicial way. These sorts of changes could include recording the proceedings of the Authority, offering the opportunity for cross-examination and ensuring parties are actually allowed to attend the proceedings and that decisions are not made before considering the relevant submissions. What I want to see is an authority that retains relatively simple access to justice that is not bogged down by too many rules and procedures, yet ensures proper justice is delivered.

I will also propose changes to allow complicated cases to bypass the Authority and go straight to the Employment Court. If we can make the decisions made by the Authority more consistent and more reliable, employers and employees will both enjoy more certainty in the employment relationship.

Everything this Government is doing is aimed at putting the employment relationship on a sound footing so we can focus on building more productive businesses and higher wages. I am also mindful of the need to offer flexibility at a time when the recession is putting significant pressure on businesses and everyday New Zealanders.

It's important that employers continue to explore every option they can to keep their staff in work. We have heard the ideas out of the Job Summit, but that does not mean we need to stop looking for further solutions. There is an ongoing opportunity to think creatively and maintain the workforce in preparation for the economic recovery. Those who can keep and develop staff will be in the best position to capitalise at that time. Jobs matter.

But it's not just about protecting jobs; there is also a focus on ensuring that when people are inevitably made redundant we have mechanisms in place to help them return to work as soon as possible. I am confident that, from a Government perspective, we are on the right path to being in the best position possible to capitalise when the global economy recovers. But if you have any further ideas, we are always willing to listen.

Thank you.