The new Workplace Relations Minister Brooke van Velden has defended the Government's move to repeal Fair Pay Agreements (FPAs), saying they will hurt low-wage employees and lead to job losses.
It comes in the wake of criticism the ACT MP ignored official advice that scrapping FPAs would disproportionately impact women, Māori and Pasifika and young people.
The coalition Government has committed to repeal Fair Pay legislation within its first 100 days in office. It is something both National and ACT strongly campaigned against while in Opposition.
No employees have yet received FPAs, however, six employee sectors have successfully applied to begin negotiations including bus driving, cleaning, security, hospitality, supermarkets, early childhood education, and port work.
More than 10,000 people have signed a petition to keep FPAs which the New Zealand Council of Trade Unions (NZCTU) said is a sign of how popular the new legislation was amongst workers.
"FPAs could revolutionise entire industries, lifting pay, conditions, and access to training. We also believe the new laws will stop the brain drain to places like Australia, which have similar systems to FPAs in place," NZCTU President Richard Wagstaff said.
"This is a game-changer for hundreds of thousands of Kiwi workers."
However, van Velden doesn't believe FPAs would help increase the wages of low-income earners.
"What we do know is there is a range of ways you can increase low-wage employees' wages. ACT and National disagree with the idea of having a blunt tool like a fair pay agreement that would capture all employees and all employers within an industry without increasing productivity," van Velden told AM on Wednesday.
She said the agreements would create more costs for businesses while providing the same productivity outcomes.
As a result, van Velden said it would increase prices for consumers, put vulnerable workers' jobs at risk and may result in fewer jobs available.
"We've got to make an environment where we have productivity growth, we're able to have more high-wage jobs, but it's not going to come from enforcing employers to increase their costs if they cannot afford it. That would lead to job losses and hurt low-wage employees," she said.
A pre-election survey of employers by law firm Simpson Grierson found most employers didn't support the FPA Act. While the employers said they supported fair wages, they said FPAs alongside collective bargaining were going to create an "untenable position" for many employers.
Business NZ, which has campaigned hard against FPAs, agreed they would bring a risk of job losses.
"The likely result of fair pay agreements will therefore be job losses - mostly among lower-skilled, lower-paid workers - while unemployed people with lower skills will find it harder to get a job," Business NZ said back in 2022.
However, the Ministry of Business, Innovation and Employment (MBIE) advised van Velden the main beneficiaries of repealing the FPA system would be employers while women, young people, Māori and Pasifika people could be disproportionately affected by the repeal because those groups overwhelmingly work in low wage jobs.
A Cabinet paper leaked to Newshub earlier this week shows van Velden ignored advice given by MBIE.
In response to questions on AM about ignoring official advice, van Velden said back when the Labour Government set out to introduce fair pay agreements officials also urged against it.
Documents released to the NZ Herald in 2021 showed MBIE said its preferred option was to drop plans for FPA, warning the plan did not appear to meet international standards and may create more costs than benefits.
MBIE said while the system was likely to lead to an improvement in conditions for workers, that overall it may impose more costs than benefits.
van Velden added she disagrees she ignored official advice.
"What I have done is taken the advice on board, listened to a range of options and made a decision as a Government with a clear mandate from the people that these would be gone and it's because we don't believe these would actually help people who are low wage workers."
