July 2019
www.nzmanufacturer.co.nz
8 MANUFACTURING TECHNOLOGY Zenith Tecnica, disruptive thinkers
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ANALYSIS Forget about AI, get back to basics.
Myths busted about benefits of Fair Pay Agreements The EMA says The New Zealand Initiative’s report on Fair Pay Agreements (FPAs) busts all myths about their benefits, and shows we simply don’t need them. EMA general manager of advocacy and strategy Alan McDonald says the report reinforces the position the 8500-strong employer membership organisation took following the release of the recommendations of the Fair Pay Agreement Working Group (FPAWG).
The EMA also agrees productivity growth could be even slower with FPAs because they mean inefficient practices, a reduction in the flexibility of labour markets and an increase in the cost and complexity of a businesses’ operation.
“Let’s be clear these are compulsory national awards and they are just not needed. They don’t improve economic growth or productivity, as suggested by the FPAWG, and in fact will do more harm than good,” he says.
“We’re worried that for some businesses, if FPAs do result in higher wages, they will simply have to cut down their workforce, or in the case of SMEs shut up shop. Those at greatest risk will be the unskilled,
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“FPAs are equally disadvantageous to everyone employers and employees - and will not achieve the highly-skilled, innovative workforce, and economy and well-paid jobs that the government is seeking,” says Mr McDonald. The FPAWG recommends replacing New Zealand’s current, relatively flexible labour market regulation with FPAs, which are a compulsory and prescriptive mechanism for setting minimum terms and conditions across whole sectors or occupations. “Essentially, this would take us back to the 1980s when we had industrial awards which saw workers’ share of Gross Domestic Product (GDP) decline and more inequality in income than we have now,” says Mr McDonald. “Across our membership we have no anecdotal evidence that employers are cutting down their costs to get contracts by paying people less, and the EMA agree with the New Zealand Initiative’s finding that lack of productivity growth is not linked with the 1991 labour market reforms.”
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