Working Better Together

As we track down to the General Election on 23 September the Canterbury Employers’ Chamber of Commerce has joined with other Chambers across New Zealand in doing work on what businesses might expect from an incoming Government. Although the economy is in good shape and the prognosis for Christchurch and Canterbury is looking very good from a business perspective there is a lot we can still do better.

Central Government will be pivotal in assisting us to do just that. One of the areas that we think needs some more work is the need for Central and Local Government to work much better together. The interface between the two is often messy and unclear and both Central and Local Government tend to blame each other for the bits that fall down the middle.

There need to be new ways established to drive two-way conversations between Central Government and Local Government. We believe that Central Government needs to review where Local Government sits within the Central Government machine and we need to ensure that Local Government is adequately funded to deliver on roles delegated by Central Government. This will require some work on how Local Government is funded into the future as the current funding mechanisms will not be appropriate as responsibilities and roles continue to change.

We also need to ensure that Local Government is held to account for its collective action, its role in the community and its spending against agreed baselines. If specific work is done on this area by whoever establishes the next Government it has the potential to markedly improve Government outcomes at a national and local level for us all. 

Concerns over news that Christchurch City Council is considering introducing the Living Wage

On Thursday 27 July the Christchurch City Council is considering the introduction of the Living Wage for Council employees. There is no doubt that the concept of the Living Wage is well intentioned. We all want everyone to be rewarded with higher wages as the economy improves. However, there is considerable controversy over the sustainability of the Living Wage concept and whether or not it can achieve its objectives. 

New Zealand’s current Living Wage campaign dates from 2013, based on a calculation by social researchers of the costs of a basic healthy lifestyle for a family of two parents and two children (one aged ten and one aged four), one parent working full time and the other part time. The living family rate was calculated in 2013 at $18.40 per hour and in 2017 sits at $20.20 per hour. Living Wages are calculated on the basis of a notional employee’s domestic circumstances rather than the value of their work (skills and productivity). Many of the potential recipients of the Living Wage will not meet this criteria.

However, if the work done by employees doesn’t generate sufficient value to pay their wages, something has to give. There is abundant literature arguing that lifting minimum wages without supporting increases in productivity may actually increase poverty and unemployment in the medium and long term. This can be readily accessed online through a simple google search (search: “minimum wages increase poverty”).  A central premise is that just increasing the minimum wage increases competition for that work.  The losers in that competition are usually the uneducated, unskilled and inexperienced i.e. those often already on the edge of poverty. 

No matter how an enterprise chooses to label its approach, the approach it takes to wages should be an economically rational and sustainable one.   It is therefore vitally important that enterprises, especially those that are spending ratepayers and taxpayers money, looking to increase wages to “Living Wage” levels do so in full knowledge of the potential consequences. 

This in part is why a majority of existing Living Wage employers are in community groups and taxpayer funded public and local government sectors where their existence is not immediately threatened by the need to be profitable.

Currently accredited “Living Wage employers” are made up almost exclusively of churches, community groups, unions, left wing political parties and a very small number of small and mainly “green” businesses (e.g. organic foods). None of the local authorities that have taken up the Living Wage brand are accredited Living Wage employers.

Our City Council is generally regarded as paying its employees well. It is hard to understand why employees of the Council alone should all be entitled to the Living Wage when other organisations owned by the Council will not be. This indicates an ideologically driven positioning funded eventually by the rate payers of the city. It also sends a strong signal that this could be the beginning of a trend towards adopting an arbitrary Living Wage figure across all entities associated with Council, as is happening elsewhere in New Zealand. When looking at the big picture, one could be excused for suspecting that the Living Wage campaign is simply about raising the minimum wage through the backdoor. That would be very damaging for first time employees and the New Zealand economy.

It is puzzling as to why the City Council would consider branding its employment remuneration under the “Living Wage” banner when it is perfectly capable of remunerating employees at levels which reflect their value and contribution to the enterprise.

In considering the adoption of the Living Wage the Council needs to be very clear of the additional permanent costs this will involve, the pressure that will come on to entities associated with the Council, and the impact on the wider community.

The very small number of larger private sector employers who have increased wages to “Living Wage” levels have all apparently done so in a staged and structured manner that aligns increases in wage rates to increases in the skills and productivity of employees. Employers in this category in fact are not following the Living Wage model as such, as their structured approach has added value to the workers’ labour, rather than compensated them for their domestic circumstances.    

The same could be said for SMEs striving to remain competitive and for whom an obligation to pay unsustainable minimum wages would mean closing down, or shifting into the informal economy. 

We can best achieve higher wages and good employment outcomes by growing the Christchurch and Canterbury economy. Lifting everyone’s wages is something we should all be aiming for, but it’s a matter of how we do that and the basis for it. It is not done by a stroke of a pen.

It is important to this city and our region that we are not seen to be followers of those who have not considered the consequences of adopting the Living Wage. Let’s be a leader of those who have.

The Continuing Evolution of Workplace Relations Policy

Workplace relations have come a long way in the last 100 years. The Canterbury Employers’ Chamber of Commerce is a combination of the old Christchurch Chamber of Commerce and the Canterbury Employers’ Association. The Canterbury Employers’ Association has a long legacy of being involved in collective wage bargaining and setting terms and conditions with the unions to optimise workplace relations.

Before the existence of the Employers’ Association there were various other entities involved in setting awards and reaching agreement on workplace policy. Recently when digging through the Chamber’s archives I came across the New Zealand Awards, Recommendations and Agreements made under the Industrial Conciliation and Arbitration Act for the year 1916 and published in 1917 (exactly 100 years ago). These treaties were produced annually and this 1916 document is 1,415 pages of detailed recommendations, agreements, awards and interpretations as applied to the workplace.

In those days employment conditions were highly prescriptive, wages were determined down to the last penny and every detail of conditions of employment was prescribed industry by industry on a regular basis.

An example is the Hotel and Restaurant Employees Award covering workers in private hotels, oyster-saloons, restaurants, tea and luncheon rooms and refreshment rooms. The wages were prescribed at around £2 per week and interestingly for females in this sector, the prescription was that they would be paid in proportion of not less than three-fourths of the rates prescribed for males in similar capacities.

Under the Northern District Flax Mills Employees Award there were some interesting provisions as to smoking. It states that workers shall not smoke cigars or cigarettes in the swamp and shall not smoke at all when handling or in the proximity of dry fibre. The employer shall have the right to fix the places for smoking and when fixed a worker shall not smoke in any other place and they shall use pipe caps if supplied by the employer.

Under the District Bakers and Pastry Cooks Award there was a consideration of the introduction of machinery relating to automatic bakeries. The Court of Arbitration stated that it had always been opposed to night baking and if the concessions asked for by the representatives of automated bakeries were to be conceded they would have to be considered for all master bakers in order to place all competitors in the industry on an equal footing, the impact of which would be to reintroduce night baking with all its evil consequences to the workers. The consideration goes on to say that the Court would if practical prohibit all night baking to be effective which would be to compel consumers to accept bread which, if not quite so palatable as newly baked bread would probably be more wholesome.

These are examples of highly prescriptive policy where workers and employees were in largely adversary employment relationships requiring extraordinary restrictive and detailed documentation around workplaces. Things have changed in the last 100 years. The relationship between employers and employees is now one of inclusivity, collaboration, transparency and working towards common interests. We need to continue to evolve workplace relationship policies in modern working environments and the open domestic and international economic conditions of the 21st century.

It is important that we all stay attuned to the need to accommodate people in good working conditions and rewarding all people appropriately, regardless of gender or the nature of their work. This is best achieved by all working towards agreed objectives, not by imposing restrictive “one size fits all” divisive workplace relations in a modern economy.

In an election year we all need to keep our eye on that goal. 

Hidden Gems

We are extremely fortunate in Christchurch and Canterbury in that we have a balanced economy. Our economy is really a microcosm of the total New Zealand economy, we are not dependent on one particular sector but we have economic inputs right across the spectrum. That makes this economy stable and strong and able to weather downturns if one component of the economy should falter. We have seen that in the past and will see it in the future.

In amongst our economic mix there are some hidden gems - small operators that just get on with their business but who in total make an extraordinary valuable contribution to our social and economic matrix.

Christchurch has always been a center of pioneering and aviation. The city can trace its aviation heritage right back to Wigram which of course now proudly supports the Royal Airforce Museum of New Zealand and a unique display of airforce memorabilia of the highest standard. An organisation that ironically has flown under the horizon for many years is the Canterbury Aero Club.

The Canterbury Aero Club started at the Wigram Airfield 89 years ago and is currently located at Christchurch International Airport. Those of us that do a lot of travelling have probably noticed on take-off and landing the cluster of buildings on the southern side of the airport amongst which sits the Aero Club. The Canterbury Aero Club main facility is at West Melton where some of its fleet of 28 aircraft operate seven days a week, providing all levels of pilot training from a first flight experience through to full commercial pilot licensing. As one of the oldest clubs in New Zealand the Aero Club has made its mark in aviation globally with its international academy bringing students in from all corners of the world to be trained as commercial pilots. All of these students live amongst us in Christchurch and bring a vitality to this city and to the airport with their cultural diversity. Christchurch and Canterbury are blessed with empty skies, a variable terrain, extremely safe airports and generally good flying weather. All of these factors support an increasing capacity for flight training for locals and international customers.

At Christchurch International Airport the Harewood Aviation Park site is focused on commercial training and is unique in the world. Being able to offer training on an active international airport with all that offers from a busy controlled airspace and precision approaches, right through to flying in a way that accommodates the Airbus A380 when it is arriving or departing. It is my understanding that Christchurch International Airport is the only airport in the world with under a million people that has a daily Airbus A380 service that along with all the other aircraft movements provides a unique opportunity for training pilots.

The Canterbury Aero Club has great facilities which it uses not only for aircraft training, pilot education but also has an extremely well positioned lounge overlooking the runway and the aircraft movements of an international airport. Operators like the Canterbury Aero Club need to be recognized and cherished as an integral part of our multi-faceted economy. They are just another unique example of what we have on offer in our part of the world.