When Fair Pay Agreements were abolished last week, it marked the end of a law that had been over a decade in the making. Charlotte Muru-Lanning takes a look at where they came from, what it means that they’re gone, and what’s next.

‘It was such an exciting day,” early childhood teacher Sandie Burn says while casting her mind back to May 1 this year. Burn, who has worked in the industry for three decades, was part of a team who had been preparing an application for a Fair Pay Agreement for early childhood education workers. After more than 6,000 early childhood workers signed up in support, she was responsible for hitting the “send button” on the email to MBIE – the first major milestone on the road to what she believed would see better outcomes across her industry. “We had such high hopes – it just brought so many possibilities,” she says.

Fair Pay Agreements or FPAs, geared toward New Zealand’s most vulnerable and poorly paid workforces, offered the prospect of a “floor” of minimum rights for employees across whole industries agreed on through negotiations between unions and employer representatives. Despite the emphasis on “pay” in the name, they had the potential to transform work conditions too: breaks, training, holidays, progression pathways, secure hours, processes for addressing bullying and sexual harassment, health and safety protocols, overtime rates and more were on the table for a facelift.

Since the legislation came into effect last December, hundreds of thousands of workers – cleaners, security guards, bus drivers, hospitality workers, supermarket workers, early childhood educators – were on track to gain their own bespoke agreements. Across the course of this year, workers in some of the lowest-paid industries met at sports clubs, town halls and churches around the country hundreds of times to discuss their aspirations for their industry’s agreement. One group, bus drivers, had even made it to the bargaining table with employers, bringing them tantalisingly close to achieving a finalised agreement. 

But last week, the new government fulfilled its election pledge to get rid of the agreements by Christmas – putting a hurried lid on any headway and gains that had been made by workers so far. “It’s just heartbreaking,” laments Burn. “I’m bitterly disappointed that something that had such positive potential has been taken away. I feel cheated.”

It was a historic moment for employment rights in Aotearoa when the Fair Pay Agreements Bill passed 76 votes to 43 in its third and final reading in parliament in October last year. ​​On the occasion, then workplace relations minister Michael Wood dedicated the legislation to “those who clean, those who care, those who drive, those who serve, workers who for 30 years have been left out in the shadows of our deregulated labour market”. “This one’s for Helen Kelly,” he added.

The late trade unionist Helen Kelly played a formative role in the creation of Fair Pay Agreements and spent years urging the Labour Party to adopt some kind of industry standards framework. She had been motivated by the aftermath of the 1991 Employment Contracts Act which brought about massive deregulation and liberalisation of the labour market, leading to heightened unemployment, a stagnation of wages for low-paid workers, and a collapse of worker representation by unions. Almost overnight, the existing industry-level bargaining awards system was dismantled, and a whole generation of workers grew up with no exposure to the once taken-for-granted idea that they could collectivise for a better deal. Essentially, it broke down any collective power that workers had previously held.

A lack of sector-wide worker representation and industry-wide standards meant companies could now compete by using wages and conditions as a key cost variable, leading to a “race to the bottom”, where even if individual companies wanted to provide their workers with decent pay and conditions, their industry competitors could undercut this and offer a lower price. The logic being that while one cafe might pay their staff generously, their competitor across the road might pay staff less in order to offer more competitively priced coffees.

This regime of low pay and weak minimum standards, in Kelly’s eyes, placed workers in increasingly precarious, dangerous and dehumanising situations. In 2011 she drafted a sprawling 207-page bill as a kind of solution to this: a model of industry-standard agreements, which set a bare-minimum base for how workers within particular industries could be treated, over and above which individual contracts would be negotiated.  

In 2011, the policy was added to the Labour Party’s manifesto and was later christened Fair Pay Agreements – an ever-so-slightly catchier name than the original “Industry Standard Agreements”. After Labour formed a government after the 2017 general election, the party set up a working group to make independent recommendations to the government on the scope and design of the policy. Chaired by Jim Bolger, who was prime minister in the fourth National government when the Employment Contracts Act was enacted, and composed of nine other members representing unions, business and expertise in employment law, its final report was published in late 2018. The report found that “wages in New Zealand have grown, but much more slowly for workers on lower incomes than those on high wages; and they have grown more slowly than labour productivity” and argued that FPAs could boost low pay, while ensuring “good employers are not disadvantaged by paying reasonable, industry-standard wages”.

Progress on FPAs during Labour’s first term was sluggish, under then minister for workplace relations Iain Lees-Galloway, who had established the working group. One of its members, labour relations academic Stephen Blumenfeld, described the period as “frustratingly slow”. It’s been reported that Winston Peters, who was a vocal opponent of the policy, acted as a handbrake while he was a coalition partner. 

Wood took over the portfolio in 2020, and says that while there has been some criticism of the snail-like pace of FPAs, over the last three years he rolled out the legislation as fast as he could. “If you look at the legislation, it’s a massive new set of institutions and rules, a huge change in the employment relations framework – it’s not just adapting an existing process, it’s building a whole new process and set of institutions,” he says. “That took real time and a huge amount of energy.”

From their inception, FPAs have been plagued by criticism from employers and their representatives. While a smaller, quieter group of employers have expressed support, mostly due to the perceived benefits of being able to pay their staff more without being undercut by competitors, the prevailing narrative in the media from the business community has been one of concern. The predominant rhetoric has been that FPAs would create additional complexity, incur higher costs, cause disruption and reduce flexibility. 

Despite being a member of the working group, the country’s largest employer representative body, BusinessNZ, was especially active in voicing opposition against FPAs. It ran a concerted campaign online, on radio and on television calling on New Zealanders to reject FPAs. Suggestions made by BusinessNZ about FPAs – that they were akin to “compulsory unionism”, that employers would be “forced to the bargaining table”, that they would “impose ‘one size fits all’ pay rates on everyone” – were repeatedly dismissed by advocates for FPAs as misinformation. Nonetheless those arguments seem to have left their mark.

As the results began to roll in on election night this October, it quickly became clear that FPAs were in jeopardy. Both National and Act had vowed to repeal the legislation immediately throughout their respective campaigns, and New Zealand First had been a vocal opponent when the policy had first been initiated.

Even so, the swift axing of FPAs under urgency and without a select committee process last week might have seemed cruelly quick to their supporters when considering the scale of the organising, development and campaigning that had gone into them over more than a decade. Not to mention the persistence of the problems around inequality and productivity that the legislation was attempting to solve.

“We’ve seen excitement in people at those [FPA] meetings,” CTU president and bus driver organiser Richard Wagstaff says. “Many workers had never been in a room with their peers before. Instead of people feeling on their own, there’s been so much conversation and a sense of camaraderie.” In the wake of the legislation’s repeal, those workers who believed they were in the process of resolving long-term issues within their industries are now simply being told that they won’t be fixed, says Wagstaff.

In parliament last week, newly appointed workplace relations minister Brooke Van Velden played down any impacts on workers as a result of removing the legislation, arguing that the agreements would have made it tougher for businesses and employees would be no worse off as none of the agreements had actually been implemented yet.

However, for many of those mourning the demise of FPAs, the current lot for workers in Aotearoa is untenable. A Treasury paper leaked earlier this month reported that Fair Pay Agreements were likely to disproportionately benefit Māori, Pasifika, women and young people who are over-represented in jobs where low pay, job security, health and safety are prevalent issues. 

“The status quo is dismal,” says hospitality worker and Unite Union co-president Xavier Walsh, pointing to data that reveals a bleak landscape for workers in Aotearoa. For one, there are the woeful statistics around work-related deaths – an estimated 10,000 people have died from occupational ill health or workplace fatalities since 2010. According to AUT research published earlier this year, 29% of workers in hospitality said they didn’t get paid correct holiday pay, and a report from the Human Rights Commision last year found that 30% of workers had experienced sexual harassment and 39% had experienced racial harassment. “That’s abysmal,” says Walsh. “We need to have a discussion with industry to figure out the best move forward.”

Those workers who have been actively involved in the process say that although the agreements might be done for, you can’t undo all the good that came out of the process. “I can see how people would think it could be seen as a waste of time,” says Walsh. “We tried so hard, and it seems that [we’ve] got nowhere but actually, we’re far stronger for it.” Despite the fact that there was no requirement for workers to join a union in order to take part in the FPA process, Walsh believes the exercise has galvanised support for the union movement. “You’ve seen so much solidarity in the union movement, and also understanding of what unions do in the modern day.” 

If or when Fair Pay Agreements, or something like them, might return in the future remains to be seen. Unions have signalled that they won’t stop advocating for them, and view their status now as merely a temporary pause rather than the end point. The looming question is, if not Fair Pay Agreements, what alternative measures could be put in place to stop the exodus of New Zealanders moving to Australia, where they have a well-established comparable system of industrial standards and earn on average $401 more each week than we do.

At a protest in Auckland days before the legislation was dismantled last week, Labour’s workplace relations spokesperson Camilla Belich promised demonstrators FPAs would be “a priority for the next Labour government”. Likewise Wood believes Fair Pay Agreements are not consigned to the bin for Labour, for the simple reason that the issues that gave rise to them haven’t gone anywhere. “People in New Zealand should have every expectation that whatever role they’re in, from the most humble job to very important roles, that they’ll have justice and dignity and decency and be able to live a decent life, and FPAs were one of the biggest tools that we had to achieve that,” he says. “The precise policies when we go into the next election, who knows exactly what they’ll look like, but it’s my view that we need something like this model.” 

Sandie Burn, the early childhood teacher, reflects that while the hopes of workers like her have been dashed for now, the sheen of FPAs hasn’t completely faded. That experience of congregating with colleagues across the country for the purpose of ensuring better working and living conditions collectively has cultivated a more unassailable solidarity between workers. And with how close they got to gaining an agreement, it’s also cultivated a fierce awareness that something better is possible. “We’ve seen what it could look like and we’ve been so close to it,” Burn says. “One way or another, something will happen where these things are changed – and we are more determined now than ever.”