Interpretation of principles
6. A living wage is different to a wage set at or just above the poverty threshold. NACEW supports the adoption of the European goal of two-thirds of the average wage, with an immediate rate of $12 per hour for all publicly funded contracts in these sectors.
Minimum wages in New Zealand were originally set at around 80 per cent of the average wage. In 1973, they were at two-thirds, which is consistent with international benchmarks such as that used by the European Union. The average wage is currently $21.90. Two-thirds of this is $14.60 per hour. NACEW would support a phasing in of the two-thirds figure over three to four years, from a new public contract minimum of $12 per hour. It would of course move each year in line with wage movements. By way of comparison, the OECD poverty threshold (as distinct to a living wage) is 60 percent of median household income.
7. When assessing whether there is a demonstrated commitment to good labour relations the following need to be considered:
- whether there is a collective agreement in existence, or if not whether the provider is engaged in the process of negotiating a collective agreement;
- whether the rate of union density amongst the provider's staff is generally representative of the level within the sector, and whether it is increasing or decreasing;
- whether a provider has refused to allow a ballot for a bargaining fee to apply to non-members; and
- the extent of union involvement in the pay and employment equity audit process, as well as health and safety and training issues.
A requirement for good labour relations as indicated by the above is consistent with the government's own policies as articulated in the Employment Relations Act 2000 (ERA) which has as one of its objectives the promotion of collective bargaining (cf s 3); in the Health and Safety in Employment Act 1992, and the government's policy with respect to pay and employment equity in the state sector. It is also consistent with international standards applying to public contracting and the public sector. In the United States union neutrality clauses are common. Although on the surface union neutrality may appear to be a lesser standard than recommended here, it must be remembered that other than in right to work states, unionised workplaces are all "closed shops". Union neutrality in effect is equivalent to not opposing (and not campaigning against) the holding of a bargaining fee agreement in New Zealand. Such arrangements are consistent with freedom of association principles enshrined in both the ERA and the New Zealand Bill of Rights Act 1990 (Lavigne v Ontario Public Services Union [1991] 2 SCR 211). In the United Kingdom, all new civil service employees are encouraged in their letter of employment to join a trade union of their choice.
8. When assessing whether there is a demonstrated commitment to pay and employment equity, the fact of whether an audit has occurred and whether the problems identified are being tackled will need to be considered. Training issues such as improved basic literacy skills may also be a relevant factor under this heading.
As far back as 1965, the United States had, as one of the terms of federal contracting, that firms would have an equal employment opportunity policy (which included pay equity). Similar policies were subsequently adopted in other jurisdictions such as Canada and Australia. The equality dimension of public contracting (both in respect of employees and consumers) is also widely acknowledged in the United Kingdom, which has recently through the new Equality Act placed positive duties on all public authorities to eliminate discrimination and improve equality of opportunity. The proposal by NACEW is consistent with the new United Kingdom approach that sets principles and standards but is not prescriptive.
9. The most obvious way in which higher rates for increased skills, provision for on the job training and so on will be transparent will be by way of a collective agreement. IEAs, which are confidential, clearly are inadequate.
The government is not the employer of the staff and does not want to be setting actual wages and conditions. On the other hand, the government needs to be assured that if it funds higher wages, payments for skill and provides financial support for on the job training that this is being delivered (without slippage) by the provider. One obvious way this can be achieved is through collective bargaining where the outcome is public and therefore transparent. In some instances, there may well need to be some discussion (either jointly or separately) or agreed understanding between the funder and the union and employer parties before any collective agreement could be concluded. However, this is not really any different to that which occurs in other government sectors such as public health and education. The government, albeit the funder, is still removed from the actual employment negotiations.
