Employment law changes will have unintended consequences

Hort Talk
with Mike Chapman
HorticultureNZ CEO

From May 2019, New Zealand’s employment law will be very different from today –and unfortunately, there will be unintended consequences.

There’ll be a greater emphasis on unions in the workplace. This is coming about through two employment law amendments. The Government’s goal is to better protect workers and to ensure they’re not exploited in the workforce. Plus, the Government has indicated there will be a significant increase in the minimum wage that could be up around $1.75 an hour. This is a move away from letting the market determine conditions and minimum pay.

The intended consequence of these changes is to improve workers’ employment conditions and wage rates.

Policy settings

Currently, NZ is experiencing high employment levels. To attract workers, employers are offering good conditions and wages, where the economies of their business permit this. Mandating further wage increases will not, in my opinion, change a great deal – other than make it more difficult and expensive to employ workers. That’s where I think there’s an unintended consequence – these measures may result in less unemployed New Zealanders being given the opportunity to enter the permanent workforce. I acknowledge 60-day trial periods will continue for small employers, but depending on how that is assessed, many horticulture operations may miss out on this.

A better and probably more productive way forward would be to increase the support given to both the unemployed and to businesses to enable those unemployed people to start a career. The more difficult this becomes, the less likely it will happen. Despite any law changes, our efforts will be focused on finding meaningful and long careers for unemployed New Zealanders. The key to success is getting the policy settings right to achieve this.

Another possibly unintended consequence will come from Multi-Employer Collective Agreements. Many of our farms, orchards and commercial gardens are family-run, intergenerational businesses that employ both permanent and seasonal workers, as well as family members. In many respects, these businesses are no different from urban small business operations. They’re collectively the engine room for NZ’s continued financial vitality and greatly contribute to the social and cultural sustainability of our country. It is possible for businesses to opt out of MECAs on reasonable grounds. In horticulture there are about 4000 small businesses. There are also different work conditions and wage and salary payments dependent on the type of crop that is grown, and the size of operation. To have one MECA covering all 4000 businesses, without allowance for these multiple variations, would stifle productivity.

Compelling case

I note there can be different schedules in a MECA with application to different size and type of business. But few small businesses have human resources specialist staff members, so making compliance straightforward is the best way for it to be met. It’s also true of small businesses that their staff are one of their most important assets, so generally, they’re looked after. We therefore hope we can make a compelling case for many of our small businesses to be exempt from MECAs, so they can concentrate on the business of growing healthy food. 

The Bill requires an agreement be reached, but for 4000 very different small businesses, that may be impossible to achieve. This would mean getting the 4000 business owners to agree on one set of conditions – with, doubtless, a multiple number of variations.

As these law changes are further developed we’ll engage with government, with the goal of making them as practical and as easy for our small businesses to adopt and implement so they can continue to grow and drive NZ’s financial viability.

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