Back toward Serfdom in New Zealand

By Baird, Charles W. | Freeman, April 2004 | Go to article overview

Back toward Serfdom in New Zealand


Baird, Charles W., Freeman


In the September 2000 issue of this magazine I reported that the Labour Party in New Zealand, at the behest of labor unions, had repealed the 1991 Employment Contracts Act (ECA), which had abolished compulsory unionism there. In its place was substituted the Employment Relations Act (ERA) to help unions reverse their drastic decline in membership.

It didn't work. When the ECA was repealed in 2000, only around 20 percent of New Zealand workers were covered by collective-bargaining agreements. In December 2003 the figure was still around 20 percent. The special privileges given to union organizers by the ERA were not strong enough to overcome the culture of voluntarism that emerged during the years of the ECA. Distraught union bosses have now instructed their mandataries in the Labour Party to change the law yet again, and in December Labour Minister Margaret Wilson announced a new bill that, she hopes, will accomplish her masters' ends.

From a classical-liberal perspective there are four particularly egregious features of the proposed bill: It disadvantages individual, relative to collective, employment contracts; it imposes drastic new "good faith" requirements on both collective and individual bargaining; it promotes multi-employer collective bargaining; and it forces transfer of terms of employment from one employer to successor employers or contractors.

Unlike American workers, New Zealand workers have a right to decide whether to be subject to a collective agreement between a union and an employer or to negotiate an individual contract. In America, where there is a certified union, all workers are forced to be represented by it and are subject to its collective agreements. That is called "exclusive representation." New Zealand unionists would love to have such monopoly bargaining privileges, but as of yet even the Labour Party has refused to go that far.

Nevertheless, the proposed amendments are a step in that direction. They would make it illegal for an employer (without union permission) to grant workers on individual contracts the same terms of employment that are in the union's collective agreement. Moreover, an employer would be forbidden to offer any better terms of employment to workers on individual contracts because it would be a "breach of good faith" for an employer to do anything to "undermine" any collective agreement. Minister Wilson cited offering better terms in individual contracts as an example of such a breach. So it looks as if the only alternative open to an employer is to offer inferior terms of employment in individual contracts. I suppose if this doesn't work, the next thing they will try is exclusive representation.

Under the proposed amendments all labor-management relations must be conducted under a "duty of good faith," which, in Wilson's words, "means more than the common law obligations of mutual trust and confidence." Section 6 of the bill says that the duty of good faith "requires the parties to an employment relationship to be active and constructive in establishing and maintaining a productive employment relationship in which the parties are, among other things, responsive, communicative, and supportive." Wow! That is sufficiently mushy to sustain just about any allegation of breach by any employer who docs not cave in to union demands. …

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Back toward Serfdom in New Zealand
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