Friday, December 16, 2011

Labour Law and Human Rights: an interesting Australian development

Those damn Aussies always try to go one better-and in one respect have succeeded.  The Human Rights (Parliamentary Scrutiny) Act 2011 will commence on 4 January 2012. The new Act will is intended to improve parliamentary scrutiny of legislation for consistency with Australia’s human rights obligations through two measures:
  • requiring that all new bills and disallowable legislative instruments be accompanied by an assessment of compatibility with human rights, and
  • establishing a new Parliamentary Joint Committee on Human Rights.
The definition of human rights is particularly broad and goes well beyond that in the New Zealand Bill of Rights Act 1990.  The scope of the compatibility report will in turn need to be much broader than that provided under s 7 of the New Zealand Act. It also appears that in Australia an assessment will be required for all legislation, not just where there is an apparent inconsistency.

The definition of human rights for the purpose of parliamentary scrutiny is particularly wide as human rights are defined as the rights and freedoms in the seven core United Nations treaties to which Australia is a party:
  • International Covenant on Civil and Political Rights
  • International Covenant on Economic, Social and Cultural Rights
  • International Convention on the Elimination of All Forms of Racial Discrimination
  • Convention on the Elimination of All Forms of Discrimination against Women
  • Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment
  • Convention on the Rights of the Child
  • Convention on the Rights of Persons with Disabilities
This should lead to some interesting reading in the assessment statements.  It would have been interesting to see such statements in New Zealand and readers might care to contemplate those on recent labour law changes in the light of the extracts below.The interesting bit  from a labour law perspective is  articles 6 -8  of the International Covenant on Economic, Social and Cultural Rights.

Article 6
1. The States Parties to the present Covenant recognize the right to work, which includes the right of
everyone to the opportunity to gain his living by work which he freely chooses or accepts, and will take
appropriate steps to safeguard this right.
2. The steps to be taken by a State Party to the present Covenant to achieve the full realization of this
right shall include technical and vocational guidance and training programmes, policies and techniques
to achieve steady economic, social and cultural development and full and productive employment
under conditions safeguarding fundamental political and economic freedoms to the individual.

Article 7
The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just
and favourable conditions of work which ensure, in particular:
(a) Remuneration which provides all workers, as a minimum, with:
(i) Fair wages and equal remuneration for work of equal value without distinction of any kind, in
particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal
pay for equal work;
(ii) A decent living for themselves and their families in accordance with the provisions of the present
(b) Safe and healthy working conditions; (c) Equal opportunity for everyone to be promoted in his
employment to an appropriate higher level, subject to no considerations other than those of seniority
and competence;
(d ) Rest, leisure and reasonable limitation of working hours and periodic holidays with pay, as well as
remuneration for public holidays

Article 8
1. The States Parties to the present Covenant undertake to ensure:
(a) The right of everyone to form trade unions and join the trade union of his choice, subject only to
the rules of the organization concerned, for the promotion and protection of his economic and social
interests. No restrictions may be placed on the exercise of this right other than those prescribed by law
and which are necessary in a democratic society in the interests of national security or public order or
for the protection of the rights and freedoms of others;
(b) The right of trade unions to establish national federations or confederations and the right of the
latter to form or join international trade-union organizations;
(c) The right of trade unions to function freely subject to no limitations other than those prescribed by
law and which are necessary in a democratic society in the interests of national security or public order
or for the protection of the rights and freedoms of others;
(d) The right to strike, provided that it is exercised in conformity with the laws of the particular
2. This article shall not prevent the imposition of lawful restrictions on the exercise of these rights by
members of the armed forces or of the police or of the administration of the State. 

3. Nothing in this article shall authorize States Parties to the International Labour Organisation Convention of 1948 concerning Freedom of Association and Protection of the Right to Organize to take legislative measures which would prejudice, or apply the law in such a manner as would prejudice, the guarantees provided
for in that Convention.

Sunday, September 18, 2011

How Inflexible is New Zealand's Labour Market?

Last week Andrew Scott-Howman in his Workface blog posted on New Zealand's ranking in the Global Competitiveness Report published by the World Economic Forum.  This body is a conservative think tank whose New Zealand partners are Business New Zealand and The New Zealand Institute.  The latter has an excellent commentary on the overall New Zealand report on its website. This post will focus purely on the Labour Market Efficiency "pillar" of the report on which New Zealand ranked 11th internationally, ahead of Australia at 13th.  This score is based on a measurement of nine factors which are (with rankings in relation to 142 countries-  the higher the place the greater the efficiency):
  1. Cooperation in labour-employer relations  (13th)
  2. Flexibility of wage determination  (26th)
  3. Rigidity of employment index (10th)
  4. Hiring and firing costs (86th)
  5. Redundancy costs measured by weeks of salary required to be paid (1st)
  6. Pay and productivity (34th)
  7. Reliance on professional management (2nd)
  8. Brain drain (82nd)
  9. Woman in labour force: ration to men (43rd)
Those items in bold are derived from the Forum's Executive Opinion Survey (in the case of New Zealand apparently 51 "business leaders" according to the New Zealand Institute commentary),  All other figures come from the World Bank's 2010 Doing Business report except for 9 which is from ILO figures.

The mixing of hard and soft data in this way to produce an overall figure seems somewhat dodgy at best (and the World Bank figures are themselves not without problems).  This is particularly apparent in relation to the outlier ranking of hiring and firing costs.  This figure seems to reflect employer prejudice and misunderstanding rather than anything resembling the reality of employment protection in New Zealand.  By way of comparison for example the OECD in 2008 ranked New Zealand as having the 4th least strict employment protection!

One particularly interesting result from the Executive survey was the ranking of "restrictive labour relations" in the overall survey results.  It was ranked 6th of 11 issues with a weighted score of 8.9 compared to 22.7 for the major concern, "inadequate suply of infrastructure."  In terms of the labour market the top concern was an "inadequately educated labour force" in 4th pace with a score of 11.5.  Interestingly Australian executives ranked "restrictive labour relations"as their top concern with a score of 16.6.  Given the heat of the debate on this topic in Australia at the moment one wonder if this reflects a response to the hot topic of the moment rather than reality - the OECD ranking for Australia was 5th.

Such reports are interesting but should be read with a considerable grain of salt. New Zealand's 11th overall ranking indicates a very efficient labour market even without the distortion introduced by the survey evidence

Tuesday, September 13, 2011

Workers as Commodities.

In 1944 the International Labour Organisation, at its meeting in Philadelphia, declared that "labour is not a commodity" a declaration intended to reassert the ILO membership's commitment to the achievement of social justice .

In Sunday's New Zealand Herald Damien Grant asserted that "Economically, the unskilled are irrelevant. They are a commodity." Roger Kerr's comment to the Dublin Economic Workshop in 1999 made a similar point although in a considerably more moderate form: "while people are not commodities or articles of commerce, the labour services they provide using their mental and physical capacities most certainly are." Kerr's comment, especially in its wider context, makes it clear that his comment extended to all workers who are sellers of labour services, unlike the position taken by Grant that "Only talent matters" with the implication, unlike Kerr, that "talented" workers, whatever these may be, are in some way not commodities but rise above the common herd!

I do not intend to comment in any detail on the obnoxiousness of Grant's comments but they should not go unremarked.

The view that labour is a commodity, and the related claim that there is no inequality of bargaining power, may make sense in the abstruse mathematical models of neoliberal economists, and it can be argued that it is economically illiterate to make such comments. This is true, however, only if the discussion is confined to economic models, models whose relationship to the real world is tenuous at best. There is much to be said for the comment that economics was invented to make weather forecasting look credible. In other words such statements are essentially assertions, made within the realm of economic theory, and should be confined to that sphere. Outside a strict economic context Grant's statement translates as "unskilled workers ought to be commodities".

The statement that "labour is not a commodity" is not an economic statement-it is a normative statement designed to express a particular set of political and social values that I need not elaborate on. They are well known in any democratic society. In essence it encapsulates the values that all workers are entitled to expect to work in decent conditions and to receive a reward for that work that provides a reasonable standard of living relative to the economic condition of the society within which they live. It is also a rejection of extreme market ideology of neoliberal economists. Genuine science observes and attempts to explain the world. Economics develops models and wants to make the world conform to them, a characteristic it shares with religion.

The fundamental problem with comments such as that made by Grant is that they take statements that may have some validity in a closed and limited model, and attempt to present them as a universal truth rather than as the ideological position they are. Grant is attempting to win an ideological-political argument that seeks a particular distribution of wealth and influence in society-a normative position that he seeks to disguise as an inevitable truth.

The rest of us may have trouble with defining exactly what our normative position is but at least we are not pretending to do otherwise.

Friday, August 26, 2011

Employment Law and the Election

Apparently today is the first day of the three month 'regulated period' during which political parties are required to spend their own money on electioneering. With a little imagination that makes today a good day to begin commenting on the implications of the election for the future of employment law.

Three years ago all seemed reasonably quiet on the employment front. National's minimal employment policy fitted onto a single, generously spaced, A4 page. Business New Zealand were making much of how change was not required and a period of legal stability was required. Labour had, on employment policy as much else, run out of steam. I was even rash enough to suggest that some broad degree of consensus might have emerged on the structure of employment law. This opinion was based on the fact that the ERA had changed little and that the ECA labour market reforms remained firmly in place. Indeed, from an industrial relations perspective, the ECA changes had been further entrenched.

Rash I might have been, but not stupid. As a good lawyer and an academic I was careful to qualify this view with a few "perhaps" and "it may be"s and so on. While my prediction did look justifiable for a while, it soon became apparent that I had allowed my natural optimism to override my cynical common sense. One likes to think law reform is based on evidence and reasoned opinion. I had of course temporarily overlooked that this is politics where evidence and common sense always take second place to ideology, the prejudice of a party's supporters and short term expediency. Hence of course the 90 day trial periods were quickly extended to all workplaces and s103A amended to favour employers in personal grievance cases to an even greater degree than was previously the case. In what can only have been a purely instinctual kneejerk response, union access to employees was limited.

In the case of all three reforms there was no evidence of any 'mischief' that needed reform. Indeed the law was working perfectly satisfactorily in all cases. That is if you believe that employees are citizens and that they should enjoy basic protections in their employment. Sort of like the owners of businesses, only considerably less! Of course, if you take the view that employees are commodities and disposable, the perspective is different. However in a democracy there should be a balance of rights and the ERA had achieved that, but in a manner that was both cautious and conservative. The New Zealand labour market, since 1991,has been, and remains, one of the least regulated among the OECD countries. In 2008 we had the 4th least restrictive level of employment protection, not that one would know it given the cries of woe from business lobbyists.

This election promises to be more interesting. National's far right and ACT clearly wish to return employment law to their rather strange vision of a 19th century utopia, the mainstream of National seem to base its policy on small town Chamber of Commerce anecdotes, and Labour shows signs of recovering the soul it sold in the 1980s!

All in all it should be interesting and further blogs will emerge when policies are announced.

Saturday, July 9, 2011

NZ Labour Law Association Inaugural Conference

The New Zealand Labour Law Association Inc will, in association with Victoria University's School of Law, hold its inaugural conference on Friday 2nd December this year. The final programme is yet to be confirmed and papers may be submitted for possible presentation. One theme will be issues from Australia. Prof Andrew Stewart of the University of Adelaide will provide an account of current developments in Australian law and the Fair Work Act and Prof Richard Johnstone from Griffith will speak on the proposed Australian model OSH law.

You can register online and find further information at

Domestic Workers in Singapore

In my last blog I mentioned the ILO convention on domestic workers. This article from The Guardian is a useful account of what is probably the better end of the problem. Singapore does tend to have a sound legal system and in comparative terms is likely to be one of the better places to be employed - although it, like the UK, has refused to ratify the convention. Nevertheless it provides a useful account of the degree of exploitation and the attitude of some employers

Tuesday, June 21, 2011

ILO Convention on Domestic Workers

On 16th June the International Labour Conference voted overwhelmingly to adopt the Convention concerning decent work for domestic workers and an associated recommendation. Readers might recall that when this item arose last year the New Zealand government and employer representatives at the conference were criticised for their failure to support the proposed convention. At the time the Minister of Labour stated that while the government supported the convention's principles it thought that a convention was not appropriate.

However, at the final vote for adoption last week all New Zealand representatives voted for the adoption of both the convention and recommendation (the ILO is unique in that it is the only international organisation that has non-government members as official voting delegates-each member state has 2 government delegates and 1 each representing employers and unions). Paul MacKay from Business New Zealand who is currently the Employers Vice-Chair at the ILO was quoted as stating:
“We all agree on the importance of bringing domestic work into the mainstream and responding to serious human rights concerns. All employers agree there are opportunities to do better by domestic workers and the households and families for whom they work”.
This convention is particularly appropriate for ILO consideration as it is aimed at short and long term migrant workers. The ILO states:
Recent ILO estimates based on national surveys and/or censuses of 117 countries, place the number of domestic workers at around 53 million. However, experts say that due to the fact that this kind of work is often hidden and unregistered, the total number of domestic workers could be as high as 100 million. In developing countries, they make up at least 4 to 12 per cent of wage employment. Around 83 per cent of these workers are women or girls and many are migrant workers.
This group of workers often enjoys little or no legal protection and are particularly vulnerable to exploitation and abuse which at its worst constitutes forced labour and quasi-slavery. A brief web search will quickly pull up examples of significant abuse of both child and adult domestic workers including human trafficking , physical and sexual abuse and in some cases murder.

The convention adopted is ambitious and sets strong standards that should be met. However adoption does not constitute ratification and while the conventions adoption provides clear international standards this is a long way from seeing those standards made effective. It is commendable that New Zealand has now made a clear statement endorsing the need for those standards.

An ILO press release with links to the convention can be found at:

Friday, June 17, 2011

Employment and the Minimum Wage

Two Australian academics have recently published an article on the minimum wage and its employment effects in the British Journal of Industrial Relations [Wang-Sheng Lee and Sandy Suardi Minimum Wages and Employment: Reconsidering the Use of a Time Series Approach as an Evaluation Tool (2011) 49 BJIR 376-401]

The article analyses teenage employment in Australia for the period 1992 to 2008 which covers the period before and after the introduction of a federal minimum wage in 1997. The authors tentative conclusion is "that the seven minimum wage increases in Australia from 1997 to 2003 appear to not have had any significant negative employment effects for teenagers.” The authors suggest that one explanation for this is that “the increases have generally been moderate and predictable, closely tracking the general rise in price levels. Furthermore, they also add that for three states their analysis is “suggestive of a possible adaptation to the new regime.”

Others with more statistical and economic expertise may have views on the authors’ methodology and findings but for the more general reader it is worth noting one point made in the article. The authors refer to a meta-analysis of the minimum wage literature, [Doucouliagos, H. and Stanley, T. (2009). ‘Publication selection bias in minimum wage research? A meta-regression analysis’. 47 BJIR 406-428] and notes that” this analysis finds that research on minimum-wage effects contains the clear trace of selection for adverse employment effects. Once publication selection bias in the minimum wage literature is corrected, they find that little or no evidence of a negative association between minimum wages and employment remains.” (emphasis added).

Monday, June 13, 2011

Is it that time already?

Union bashing raising its ugly head again - it must be an election year. Time just rolls on as you get older and the same old continues to be the same old. Old timers like me will recall union bashing has pretty much been standard National party fare since at least the days of the Muldoon governments who turned it into something of an art form-even if it backfired after the election it had done its job by then. However in the good old days there was at least some point to the exercise and even the most obtuse politician could find some bone to chew on with compulsory union membership, high levels of industrial conflict and the like.

However John Key's union bashing verges on the pathetic - what is left to bash! Private sector union membership sits at about 10 per cent and doesn't look like improving, levels of industrial conflict have been at extremely low levels for years and private sector collective bargaining reach has continued to plummet. The Prime Minister would have more fun kicking his garden gnomes on the way to work.

Moreover what is left to kick? The ERA already allows employers more than enough latitude to defeat union organising. There are few constraints on employer pressure to discourage union membership, freeloading can be actively encouraged through passing on and the obligation to bargain in good faith is largely ineffective in the face of employer procrastination.

Of course there are a few things employers want - the ability to unilaterally cut wages and conditions to further John Key's low wage, competitive labour market clearly being among them. Under the ECA non-union "bargaining" was largely used by employers to tell small groups of unorganised workers they were required to take a pay cut or have conditions reduced and that they would be locked out until they agreed. Many will recall the partial lockout when employers told you you were locked out of your sick pay but that you were required to continue ordinary work - legally dodgy possibly but it worked well then and no doubt will again (and the Employment Court case ending the practice was far from immune from a legal challenge). National governments have always been fairly contemptuous of the contractual rights of workers, witness the recent Whitcoulls saga, and would be happy to allow employers to have a few more tools to defeat such rights. And lets remember that what is now Business NZ suggested exactly such powers at the time of the ECA - employers it argued should have the power to unilaterally change employment conditions on a few days notice!

Unfortunately the last few years have seen the worst of National's small minded anti-employee prejudices come to the fore to undermine what was a balanced but inherently conservative piece of legislation put in place by Labour in 2000. Labour, in what might retrospectively be seen as a major stategic error, enacted a legislative framework that should have had a reasonable term future - it did so by being overly responsive to employer interests and by refusing to push reforms that might have made bargaining effective and was unwilling to push even modest reforms in areas such as redundancy and triangular employment. Perhaps by the next time they are in power they might have learned something from this!

Thursday, June 2, 2011

The Whitcoulls Saga

Posts have been a bit irregular for various reasons but the current row relating to the employment contracts being offered to Whitcoulls' employees has stirred me into action.

What is most disturbing about this matter is the total garbage that is appearing in some newspaper comments sections and in the comments section on websites such as David Farrar's Kiwiblog. In many of these comments there is a strong view that former Whitcoulls' employees should be grateful a benevolent capitalist has deigned to give them a job and that employees either do not or should not have any rights at all in such situations. What is even more disturbing is that these comments seem to be what, for those blogs, are the more reasonable views expressed! It is perhaps worth making at least a few points.

The first is that the Whitcoulls business has been sold to a new owner, which one assumes is a new legal entity and hence legally a new employer. That new owner is perfectly entitled to offer new terms of contract going forward. News reports suggest that in the main these contracts are fairly similar, with the exception of no redundancy clause, as those previously applying. Indeed it seems that a number of benefits accrue under these contracts, such as the carrying forward of holiday and sick leave entitlements, that need not necessarily be offered. However the point should be made, and which seems to have been ignored by many commentators, is that the reason for these offers is not of course to be nice to the workers - it is because the new owner wishes to have an established and experienced workforce in place in order to minimise any disruption during the transfer and to ensure that income flows into the business as soon as possible.

The second point is that underlying the offered contract is what one presumes is a deal with the receivers to deal with the liability for wages and other monetary entitlements owed to employees as a result of the receivership. Schedule 7 of the Companies Act makes employees preferential creditors in relation to a number of amounts owing due to termination arising out of a liquidation. These include accrued wages, holiday pay and redundancy entitlements. From the nature of the contract being offered it seems the new company is taking on the cost of accrued holiday pay (and sick leave entitlements) and that employees will presumably have been paid wages up to the time they shift to the new employer.

That means of course that the major remaining liability (which may well be very substantial) is for redundancy compensation - and the receivers and new owners have seemingly done a deal to shift that cost on to employees. This allows the receiver to pay that amount to creditors further down the priority list (most likely trade creditors). In other words the employee victims of poor mangement are being required to sacrifice their legal entitlements for the benefit of other creditors. This trick is to be achieved by a new employment contract that forces employees to surrender what may well be substantial redundancy entitlements if they are to gain new employment. One presumes that the new employer receives a reward for this in the price paid for the business.

It is this aspect of the arrangement that is highly dubious and which in effect means employees are being forced to surrender a clear contractual entitlement (and even employees have legal rights contrary to the view of some comments) for the benefit of the receiver and new owner. It also should be stressed that this is not a case of technical redundancies: that involves a transfer to a new employer on the same terms and conditions, including accrued entitlements, as previously applied. This is a clear case of if you want a job it will cost you! Perhaps not a premium being paid for new employment which is illegal (Wages Protection Act) but the next best thing.

It also means that some Whitcoulls' employees may now find themselves being made redundant in the near future as this will now be a largely costless exercise for the new employer - and it will not be difficult to argue that 'reorganisation' was necessary to 'rationalise' the new operation.

This whole episode has been a fiasco and should have been unlawful - not that this is likely to happen under the current government.