Magazine of Socialist Action in Australia

New Zealand: Lessons for the Australian working class

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In May 1991, the then governing National Party in New Zealand introduced a new industrial relations law called the Employment Contracts Act (ECA). The changes that accompanied that act went hand in hand with the neo-liberal policies of privatization and deregulation programs that big business had been pushing for since the mid 1980’s.

Before the ECA New Zealand workers were generally covered by occupational and industry awards that were negotiated by unions. The ECA did away with the award system and replaced it with a system where the employment relationship was primarily between the individual worker and the boss. This new system severely undermined the role of trade unions, in fact total union membership fell from 35.4% in 1991 to 17.7% in 1998.

In NZ, big business claimed that the ECA had resulted in improvements to both employment and productivity. They pointed to the nearly 300,000 jobs created from 1991 to 1999. This figure may well be true but it ignores the fact that there was a massive rise in casual work and in underemployment. In fact, the level of underemployment trebled between 1990 and 2000. And despite the job creation figures, unemployment averaged 8.8% for the five years after the ECA was introduced. From 1991 to 1999 growth in full time employment was 15.5% compared to 36% for part time jobs, this includes part time jobs for those who worked as little as one hour a week.

The bosses claimed that the introduction of individual contracts would lead to improved productivity and dramatic gains in growth. The Howard government today is also claiming that individual contracts (Australian Workplace Agreements) will deliver higher productivity. From 1985 to 1996, New Zealand performed worse than the OECD average on employment, GDP growth, labour productivity and export volume growth. Over this period New Zealand fell to 23rd out of 26 developed countries in overall productivity. Not exactly the most impressive of figures.

The introduction of the ECA saw the number of NZ workers covered by an award or collective agreement fall from over 700,000 in 1990 to 400,00 in the year 2000.This massive drop in collective coverage gave rise to workplaces full of individual and fixed term contracts, and a huge increase in casualisation. The exploitation of the working class reached new levels and the number of working poor dramatically increased, the amount of people on state benefits increased by over 100,000 from 1991 to 1999.

Real wages fell during the horror years of the ECA, in fact real wages in 1997 were lower than those in 1974. While median incomes fell by 13.4% between 1986 and 1996, the state-set minimum wage was only increased 14% during the years of the ECA against inflation which rose 18%.

Under the ECA the rich got richer whilst the poor got poorer, from 1984 to 1998 the top 10% of households increased their income by 43% while the bottom 50% of households decreased income by 14%. Those workers that were finding it hard to make ends meet before were hit the hardest by the ECA.

In 1999 a Labour/Alliance government was elected in New Zealand this was supposed to be the saviour of the working class. Whilst they did repeal the ECA and replace it with a new law the Employment Relations Act (ERA). The award system was not replaced and many aspects of the ECA still remain. While the ERA has restored the place of unions and collective bargaining, NZ workers and their families are still struggling to rebuild their unions and recover from the damage caused.

Over five years into Helen Clark’s minority Labour government a wages gap of an average 20% remains between Australia and New Zealand workers. Although the current government has increased the minimum wage by 36% since coming to office, it is still only $9.50 an hour. Just another example of Labor governments carrying on the neo-liberal policies of the conservatives.

The lessons of the NZ experience of the 1990’s are that we can’t let Howard and the bosses push through similar industrial relation laws here in Australia. On the contrary we need use this period to build a fighting union movement to challenge the rule of capital. Also we have to remember that a Labor victory at the next election will not save us, just as it has not saved NZ workers. Along side a fighting union movement Australian workers need their own political voice. We need a new mass workers party based around the unions and progressive community groups that will fight against the neo-liberal polices of both the Liberals and Labor.

By Anthony Main


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