A highly productive, sustainable, and inclusive economy is only successful if wages and job security are also prioritised. For too many New Zealanders, their experience of the labour market is a story of exploitation and falling living standards.

Despite high employment, there are still too many New Zealanders underutilised in the workforce. In June 2022, more than 276,000 New Zealanders were unsuccessful at finding work.^[1] Unemployment rates for Māori and Pasifika are well above the Pākehā average. 12.1% of 15–24-year-olds are not in education, employment, or training.^[2] Many New Zealanders are still too dependent on the minimum wage to lift their incomes. Despite record low unemployment, more than a third of Kiwis didn’t get a pay rise last year.^[3]

We also know that there has been a huge growth in the levels of insecure work.^[4] Work is increasingly contracted out, and in sectors such as parcel delivery ‘self-employment’ is the norm. The growing use of platforms like Uber have led to reduced job security, with the loss of Kiwisaver contributions and ACC coverage. Loss of employment from these jobs also means accessing welfare support is more difficult.

“People who feel their employment is insecure are more likely than other employed people to rate their overall life satisfaction poorly”

Statistics New Zealand 2022^[5]

Our economic strategy must also have a wider approach to the labour market than just wages and jobs. Decent work should be our goal. The International Labour Organisation has defined decent work as meeting “the aspirations of people in their working lives. It involves opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for families, better prospects for personal development and social integration, freedom for people to express their concerns, organise and participate in the decisions that affect their lives and equality of opportunity and treatment for all women and men.”^[6]

The NZCTU defines Good Work as having a lasting positive impact on the worker, the employer, and the wider community. It is work that enhances the mana of workers, affords good pay and conditions, and where both employers and employees are treated with respect and dignity. Decent work must be the sum of the aspirations of tangata whenua and tauiwi in their working lives.

The NZCTU developed eight elements of Good Work, which we took to the Future of Work Tripartite Forum where it was agreed by the other social partners. These elements are:

1. Lifelong learning and mana āheinga
2. Fair wages and economic security
3. Free from worker exploitation
4. Worker voice
5. Health and Safety and Wellbeing
6. Meaningful and fulfilling
7. Productive
8. Managing our Environment Impacts

Decent work will both make New Zealand an attractive place to be a worker and business owner.

Decent work also means making sure that we are delivering for some of the most vulnerable New Zealanders. The care economy is vital to a nation's economy and community, and includes services health and education, aged care, early childhood education as well as the broader public services.

The care economy forms an integral part of both the wider economy, Māori economy, and for women. Both the work of paid and unpaid roles in care are essential in maintaining a community’s wellbeing. An approach to healthcare that leads to underfunding, understaffing, creates barriers to access will only exacerbate inequalities.

Challenge: Jobs, incomes, productivity, and work/life balance

New Zealanders have never fully recovered from the attack that was the Employment Contracts Act (ECA) in 1991. The ECA severely undermined peoples’ rights to organise and destroyed industry collective bargaining. Working people were left without a voice for a generation. The legacy of this ill-conceived reform continues to this day.

Stronger unions, greater collective bargaining and enhanced worker voice will enable workers to better challenge the existing establishment and push for better work, more training and skills development, and increase their productivity.

There is no silver bullet to correct the deep-seated bias against collective bargaining and trade union organising in New Zealand. It requires a fundamental shift in existing attitudes about work, workplace culture, the decommodification of labour, the sharing of power in decision making, and the place of workers and unions in a democratic society.

Many commentators have long recognised that New Zealand has a labour productivity problem. It has been recognised by the OECD, the IMF, and governments of all political colours.^[7] We have some of the most relaxed labour market laws anywhere in the world. According to the World Bank we are the best country in the world to run a business.^[8] Yet our output lags that found in many other countries. If creating a more ‘dynamic’ market with lower levels of regulations worked, it would have worked by now.

A recent Productivity Commission report shows that New Zealanders worked on average 34.2 hours per week, which is higher than the OECD average of 31.9 hours per week.^[9] On a five-day week, we are working three weeks longer a year. In 2021 New Zealand produced $68 of output per hour worked, that’s $17 less than the $85 of output per hour worked of other OECD countries.^[10] New Zealanders are working harder, for longer, but getting less output. As economist Paul Krugman said “Productivity isn't everything, but, in the long run, it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.”^[11]

Cheap labour reduces the incentives to invest in innovation. But even with that limited productivity growth, wages are not rising in line with output. Over the past 20 years, real wages have not kept up with output growth.^[12]

“Raising our productivity performance is the biggest economic challenge facing New Zealand, and will require a sustained effort on a number of fronts”

NZ Treasury

The gender pay gap remains a serious problem in New Zealand and has negative consequences on equity, wellbeing, quality of living and national productivity. The latest figures have the gender pay gap at 10.5%. Pay gaps remain persistent by ethnicity. The gap for Pasifika women means they start working effectively for free on 3 October, when their pay is measured against Pakeha men.

Māori women start working for free on 7 October. Asian women are working for free from 26 October, and European women start working for free from 17 November. These dates show that women of all ethnicities are still facing discrimination in employment.

Research by Princeton University economist, Henrik Kleven, shows that motherhood accounts for 80% of the gender pay gap and that childfree women’s earnings are comparable with men’s salaries.^[13] We therefore need to take steps to reduce the effects of wage scarring that working parents often experience upon re-employment. According to the Productivity Commission, wage scarring is a much greater problem in New Zealand than other OECD countries.^[14]

"An average couple in New Zealand of income earners would have to spend 37 percent of their salaries to put two children to full-time childcare, which is a huge amount”

Unicef New Zealand chief executive Michelle Sharp

Policy proposal: A Decent Work Act – to replace the Employment Relations Act, pilot a four-day work week, and free high quality public Early Childhood Education (ECE) progressively provided over time

We propose a new Decent Work Act to replace the Employment Relations Act. The Act would include:

• Changes to employment law around contracting, in line with the Tripartite Working Group on Better Protections for Contractors.^[15] In particular, delivery of the effective legal duty on “hiring entities” to step through a robust decision-making process when considering worker classification, and to be legally responsible for making this decision correctly.
• A reversal of the current opt-in requirements for collective agreements and union membership.
• The urgent ratification of the remaining core conventions of the International Labour Organisation. This would include Convention 87 ‘Freedom of Association and the Protection of the Right to Organise Convention’; Convention 138 which sets minimum wages for work; and Convention 187 on health and safety at work. The Act would also commit New Zealand to signing Convention 190 on preventing violence in the workplace.
• Allowing for pay equity claims to be extended beyond gender, to include ethnicity, disability, or sexual orientation.
• Mandatory pay gap reporting.
• A permanent tripartite institution (including unions, business, and Government) as a forum for dialogue about how to improve and extend employment relations in New Zealand. The body would build a New Zealand approach to tripartism that reflects our unique Te Tiriti obligations and would have an educational arm, like those commonly found overseas.
• A mechanism to better recognise unions and help reduce competition between them.
• Decoupling parental leave so each partner's leave is independent. This helps to break down gender segregation in the workplace and reduces the gender pay gap as a result. Sweden, Iceland, and Norway have one of the most equitable parental leave schemes which has led to fathers using over 45%, 45%, and 40% of the available parental leave benefits, respectively.
• In addition, we would suggest the following three reforms to workplaces:
• Follow international best practice and undertake a large-scale pilot of a four-day week. This would be undertaken at a sector level, on the same 100/80/100 basis as the UK.^[16]
• Progressively extend the provision of public ECE services to be free to all children. Provision would be in the form of networks of not-for-profit centres, which would also create more coherent structures for providing training and professional learning. In the process, we need to shape the future of early childhood education to ensure:
  • every child can access quality public provision of community-based, locally responsive, and culturally sustaining early childhood education services
  • the Government’s commitment to the mana, hauora, and wellbeing of children is a reality
  • there is a commitment to quality teaching and learning through a 100% qualified, fairly remunerated, and fairly treated workforce
  • the rights of children are centre stage, and the whakamana of tamariki is celebrated in the presence of teachers, kaiako and whanau.
  • prioritisation of public funding for public services meeting quality criteria.
  • Resourcing and acknowledgement of rangatiratanga for kohanga reo and Pasifika language services.
• Adapting NZIIS (NZ Income Insurance) to include parental leave.
• Make the sick leave entitlement of 10 days per year, and bereavement leave entitlements available from day one of employment to all employees (including part-time and casual employees).^[17]

Next mission:

Enabling the Enduring Wellbeing of New Zealanders

Footnotes

^[1] Source: Statistics NZ, June 2022 Household Labour Force Survey (HLFS).

^[2] ibid

^[3] Labour Cost Index, June Quarter, 2022

^[4] Pacheco, G., Morrison, P.S., Cochrane, B., Blumenfeld, S., Rosenberg, B. and Bouchard, I. (2014), Understanding Insecure Work, Centre for Labour, Employment and Work

^[5] Statistics New Zealand. (2021, May 12). Lower job security linked to lower life satisfaction. https://www.stats.govt.nz/news/lower-job-security-linked-to-lower-life-satisfaction/

^[6] International Labour Organization (ILO). https://www.ilo.org/global/topics/decent-work/lang--en/index.htm

^[7] Nolan, P. Pomeroy, R. & Zheng, G. (2019). Productivity by the numbers: 2019. New Zealand Productivity Commission. Productivity-by-the-Numbers-2019.pdf

^[8] World Bank Group. (2020). Doing Business 2020: Comparing Business Regulation in 190 Economies. Doing Business 2020 (worldbank.org)

^[9] New Zealand Productivity Commission. (2021). Productivity by the numbers. https://www.productivity.govt.nz/assets/Documents/productivity-by-the-numbers/Productivity-by-the-numbers.pdf

^[10] Ibid

^[11] Krugman, P. (1994). The age of diminished expectations: U. S. economic policy in the 1990s (2a. ed. --.). Cambridge, Massachusetts: Mit Press.

^[12]  Fraser, H. (2018) The Labour Income Share in New Zealand: An Update. New Zealand Productivity Commission Staff Research Note 2018/1

^[13] Kleven, H. Landais, C & Søgaard, J. E.  (2019). Children and Gender Inequality: Evidence from Denmark. American Economic Journal: Applied Economics, vol 11(4), pages 181-209.

^[14] Maddock, T. (2019, August 14). It doesn’t pay to lose your job! Productivity Commission. https://www.productivity.govt.nz/futureworknzblog/it-doesnt-pay-to-lose-your-job/

^[15]https://www.mbie.govt.nz/assets/tripartite-working-group-on-better-protections-for-contractors-december-2021.pdf

^[15] The 100:80:100 model means that workers receive 100% of their pay for working 80% of their five-day week time, in exchange for a commitment to maintain 100% productivity.

^[15]  Currently, employees cannot access sick leave unless they have six months’ current continuous employment with the same employer, or they have worked for the employer for six months for: an average of 10 hours per week, and at least one hour in every week or 40 hours in every month. This means workers are forced to come into work while sick, which is incredibly harmful to health, safety and wellbeing and unnecessarily increases the spread of infectious virus’.https://www.employment.govt.nz/assets/Uploads/tools-and-resources/flowcharts/Sick-and-Bereavement-leave.pdf