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: http://www.ilo.org/ilc/ILCSessions/100thSession/media-centre/press-releases/WCMS_157891/lang--en/index.htm

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).

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!

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.