PALMERSTON NORTH, NEW ZEALAND - "The Employment Contracts Act gives the employers the power to do basically whatever they want. To me, the biggest aim of it is to break unions," says Andrea Rushton, one of the shop stewards for more than 80 workers at Christchurch Carpet Yarns who were locked out of their jobs for more than two months earlier this year. The company shut its doors to the textile workers in late February after they rejected a company-designed contract that eliminated many of the gains their union had helped them win in previous negotiations.
The locked-out workers and their supporters picketed the plant throughout the lockout. Rushton was one of 13 picketers who were arrested for their actions.
"I got arrested trying to defend my livelihood," she says. "The police say we were blocking the carriageway. When they asked us in the cells what our �excuse' was, we all explained that we were defending our jobs. I don't see anything wrong in trying to stop your livelihood, your job, being driven out a driveway."
Rushton and her co-workers are victims of the Employment Contracts Act, which was enacted by the New Zealand government last year. With its implementation on May 15, 1991, the Act ended a system of industrial relations in New Zealand that dated back to the passage of the Industrial Conciliation and Arbitration Act (I, C and A Act) in 1894.
In introducing the bill into Parliament on December 19, 1990, Minister of Labour Bill Birch stated that the new legislation was intended to "place the responsibility for negotiation where it belongs, with the employer and their employees." The government explicitly sought to eliminate unions' role in labor-management negotiations. The previous "legal framework that required the intervention of unions as a third party in any recognized industrial bargaining relationship ... will be removed," Birch said. "Employers and employees will be free to negotiate any bargaining arrangements they wish. The parties themselves will decide whether they wish to bargain at the enterprise, industry, workplace or any other level."
Critics say the the Act has enabled the New Zealand government to accomplish what many governments have tried to do through repression: eliminate union influence in wage setting and unleash virtually unfettered market forces in the labor market.
"The so-called freedom given in this Act is simply the freedom to be exploited," says Graeme Clarke, secretary of the Manufacturing and Construction Workers Union. "The much-vaunted freedom of association enshrined in the Act is in fact a freedom for the employers to disassociate their workforce and to bypass the democratically elected representatives of their workers, who are, or should be, their union."
On the road to labor's demise
The new labor act is especially remarkable because the previous system of industrial relations in New Zealand was one of the most regulated in the capitalist world. The I, C and A Act and its successors sought to provide a mechanism through which conflicts between labor and capital could be resolved peacefully.
Except for a brief period in the 1930s, the principles of the I, C and A Act governed labor relations throughout the twentieth century, until the passage of the Labour Relations Act (LRA) in 1987. The cornerstone of the old system was occupational "awards," negotiated between unions of workers and unions of employers, that applied to workers and employers throughout the country. The law required all employers to abide by the minimum wages and conditions contained in an award and all workers to belong to and contribute to the union that negotiated the wages and conditions (known as compulsory unionism). All awards had to be registered by an Arbitration Court; if the parties could not reach a negotiated agreement, the Arbitration Court held hearings on the dispute and issued a binding decision.
A significant feature of the I, C and A system was that it worked to slow the rise of wages during periods of high demand for labor but to prevent or slow the fall of wages during periods of low demand.
From the late 1960s to the early 1980s, the system came under pressure from both workers and employers. In 1968, workers struck over a nil wage order decision issued by the Arbitration Court, and eventually had the decision reversed. During the economic slump of the early 1980s, employers persuaded the Government to remove the compulsory union membership provision of awards.
Elected in a landslide victory in 1984 that threw the National Government of Prime Minister Robert Muldoon out of office, the Labour Party quickly renounced its traditional pro-worker program. Instead, the new government unleashed at breathtaking speed a market-based economic revolution centered around deregulation.
"Labour was elected in 1984 on the basis of reintroducing compulsory unionism," says Clarke. "Labour kept this promise, but then used it to either gain [union] support of, or to neutralize union opposition to, all the other policies of deregulation that it was pursuing."
Under the new program, orchestrated by Finance Minister Roger Douglas, the government devalued and then floated the NZ dollar. The government stripped away regulations first from the finance sector and then from many other areas. It reduced income tax rates and imposed an indirect tax. It corporatized government trading departments (on the grounds that corporatization - administering government entities as if they were private corporations and forcing them to earn a profit - would strengthen the public sector), and then sold them (the government argued that it was selling assets, not as part of a privatization scheme, but to gain cash for social programs). And it withdrew subsidies from farming and manufacturing.
The productive sector went into crisis, but the stock market, spurred by speculative investment, boomed - until the 1987 crash.
At this stage, the Labour Government lost its nerve. Prime Minister David Lange called for "a cup of tea" and forced Douglas to resign by vetoing his next round of reforms. This rest period infuriated reform zealots who then blamed New Zealand's poor economic performance on the Labour Government's reluctance to tackle labor market deregulation and to cut government social spending.
But the Labour government did make some significant reforms in the labor- relations field. In 1987, Labour introduced the Labour Relations Act, which Clarke says "took the first steps at dismantling the old I, C and A system." In 1990, after more employer pressure, the government amended the Labour Relations Act to allow employers to opt out of national awards. Among other provisions, the Act eliminated compulsory arbitration for the settlement of awards. The Employers Federation and Business Round Table, an extremely influential lobby group of top business executives, condemned the legislation for not going far enough.
Where was the labor movement?
The New Zealand Council of Trade Unions (NZCTU) proved reluctant to fight the Labour government's efforts to weaken the traditional system of labor relations. The NZCTU supported the removal of compulsory arbitration for the settlement of awards on the grounds that, in return, it gained the legal right to strike for a new award. (However, while it is true that unions did not previously have this legal right, many did it anyway.) The NZCTU also supported the 1990 amendments to the LRA, on the basis that these concessions would satisfy employers and stop them from asking for more.
That supposition proved incorrect. On December 19, 1991, the newly elected National Government announced the introduction of the Employment Contracts Bill as part of the Economic and Social Initiative Statement. The Statement also called for up to 25 percent cuts in social welfare benefits and reviews of all other education, health, housing and social expenditures.
While community, church, unemployed and social service groups immediately organized protests around the proposed benefit cuts, it took months for the trade union movement to organize opposition to the Bill. Three months after the legislation was introduced, worker opposition finally spilled on to the streets. As the Bill was considered by a Parliamentary Select Committee, workers held major rallies and tens of thousands of workers walked off the job.
The NZCTU coordinated these actions, but it refused to back workers calling for a general strike to protest the bill. "Just as the leadership of the NZCTU had refused to organize opposition to the deregulation of the labour market under the Labour Government, it effectively sabotaged worker opposition to the Employment Contracts Bill by rejecting the call from stopwork meetings of workers up and down the country for a general strike in opposition to the Bill," says Clarke. He adds that the emphasis on what was called "pragmatism" led to divisions within individual unions. "NZTCU President Ken Douglas launched a crusade against the calls for a general strike. The leadership of some unions even campaigned against their members opposing the Bill, saying they should instead call for the Bill to be amended."
Clarke believes that this "new realism" of the NZCTU leadership "allowed the Employment Contracts Act to be passed with trade union opposition blunted and many workers feeling let down with the lack of response from their union leadership."
Draconian measures
With the Employment Contracts Act's passage, union members found themselves confronted with the following anti-worker provisions:
The provisions of the Employment Contracts Act should be seen in the context of other moves the government made at the same time. It repealed pay-equity legislation; cut unemployment and related benefits by up to 25 percent; imposed a 26-week-stand-down period for unemployment benefit eligibility for workers who were dismissed from previous employment, left previous employment without a sufficient reason or refused to take an offered position regardless of its salary or conditions; and refused to extend minimum wage provisions to those under 20. The adult minimum wage is US$3.30 per hour, but, with the wage floor set by the award system gone, it is now legal to pay young workers any rate an employer may decide.
Labor's worst fears about the effects of the Act were immediately borne out. John Ryall, an organizer with the Service Workers Union, says, "We thought the Act was bad enough, but the immediate advantage that some employers have taken with the Act and the results of some initial Employment Court rulings have made matters even worse."
For example, he says, "Because of the lack of a minimum wage for workers under 20, we now have numerous cases such as the one of an 18-year-old hamburger-restaurant worker in Wellington who was being paid US$70 for a 70-hour week. Under the previous award she would have received US$180."
Ryall also points to a landmark decision of the Employment Court regarding workers from the Society for the Intellectually Handicapped (IHC), an agency caring for the intellectually handicapped. The IHC unilaterally cut wages and worsened working conditions when its employees' union would not agree to these concessions through negotiation. The union took the agency to the Employment Court, which accepted the employer's argument that its actions were legal under the Act. "This decision makes a complete lie of the Government propaganda before the Act was passed which stated that no employer could unilaterally vary the terms of an employment contract," says Ryall.
Strengthened by the Employment Contracts Act, the employers' offensive against workers is accelerating. Employers threaten or implement lockouts almost every day. Textile workers at the Alliance Mill in Milton have been locked out since January 13 for refusing to sign a contract. Mitsubishi locked out 500 auto workers for one day in January. Now government enterprises are using these weapons to try to eliminate such things as unemployment provisions from their contracts.
"Union busting has become a growth industry," says Ryall. "A new breed of consultants is advising employers how to implement contracts by ignoring the union and going straight to the workforce to sign the contracts." The courts have ruled that these tactics are legal even in cases where the workers have signed bargaining authority over to the union and where there is proof that workers were pressured to sign a contract with the employer. And, although the Act prohibits employers from exerting "undue influence" over employees in contract negotiations, the Employment Court ruled in the Alliance Mill case that an indefinite lockout does not constitute undue influence.
Savaging unions
Government officials and employers are generally pleased with what the Act has accomplished in the year since its passage. Labour Minister Birch points to the reduction of industrial stoppages over the past year as proof that the "Act has brought employers and employees closer together."
Employers Federation Director General Steve Marshall praises the philosophy of the Act, but calls for a number of "technical changes" to make it more fair to employers.
The Business Round Table says the Act has not gone far enough and has called for the removal of all specialized Employment Courts and Tribunals and an end to the minimum wage provisions.
The Act has decimated the labor movement. A number of unions have disaffiliated from the NZTCU, criticizing its unwillingness to vigorously challenge the Act. The NZTCU itself has embarked on a campaign for union restructuring along industrial lines rather than occupational lines. By its own admission, this campaign has been unsuccessful, as have attempts by the NZTCU to prevent "body snatching" among its own affiliates.
Almost all private-sector unions have suffered severe losses of membership, up to 50 percent in a number of cases. Some major unions have disappeared, including the New Zealand Clerical Workers Union, which suffered large membership loss and became the sacrificial lamb in an NZTCU-sponsored carve-up to augment the membership of other unions. This exercise de-unionized workers more quickly than if the union had been allowed to remain in existence.
Other unions have attempted to "live with the Act" and restructured themselves into Limited Liability Companies acting as bargaining agents for both members and non- members. Still others are holding on, hoping for a Labour Party electoral victory in 1993.
"Overall, the union movement has been savaged by this Act," says Clarke. "There is a strong trend to �yellow' or pro-company unionism by the unions that are trying to survive at any price. On the other hand, some of the smaller, independent unions such as ours are being joined by other unions or sections of unions that are not into concessionary bargaining and that are prepared to fight both industrially and politically against this anti- worker piece of legislation."
The workers at Christchurch Carpet Yarns did just that. Although they had to accept many contractual provisions that they had opposed, they succeeded in forcing the company to sign a contract that included union recognition and representation. Says shop steward Darryl Payne, "We have won our contract - a union contract. We didn't get everything we thought we were entitled to, but we remain determined and united. We remain union and the company has to recognize that."