Council of Trade Unions (CTU)

Union Relevance in Aotearoa in the 21st Century

Laila Harré
National Secretary
National Distribution Union

Unions, lawyers and employers all predict difficulties with employment contracts under the KiwiSaver scheme, starting on July 1.  Council of Trade Unions economist Peter Conway said one of the main issues of concern was the 4 per cent entry level contribution, which could be a tough ask for low wage earners.

He said a 2 per cent entry level for low wage employees with a matching payment from employers was a preferred option.  It was an issue the union would raise before a final bill on the scheme was passed, he said.

Simpson Grierson law partner and superannuation specialist Neil Cameron said the traditional "total remuneration" concept was a sticking point with KiwiSaver.  He said some employers traditionally approached employees from a total remuneration package point of view, where a salary was made up of pay, and allowances for extras such as vehicles.  The KiwiSaver concept of gross salary wages was one that didn't sit well with that concept, he said.

Contract arrangements were also likely to be complicated by the fact some employees would join the KiwiSaver scheme and others would not.  The situation was in some cases likely to present difficulties when it came to wage rounds.  "In that case you've taken it into account in the wage round but you aren't actually paying it because half your employees haven't joined up," he said.  Mr Cameron said there would be some initial confusion as people tried to word employment contracts to "do all sorts of gymnastics" but believed the issues would eventually sort themselves out.

Business NZ chief executive Phil O'Reilly said after the budget the scheme's voluntary nature would cause difficulties.  He said people could opt into KiwiSaver after initially negotiating a salary without it.  If a person who did choose to opt in later agreed to have their wages reduced by the amount of employer contribution unions could argue this was "contracting out" under the law and take the employer to court.  Mr O'Reilly said wage bargaining would become very complex with some opting into the scheme and others not.  But Mr Conway said he was not convinced the scheme would lead to bargaining complications.  "It's hard to see that because really for anyone on $52,000 or below, the first couple of years of contributions are completely covered by the government."

While employers would not be fully subsidised a few years down the track or when it came to contributing to high wage earners, the subsidies for employers were still significant.  "So I don't really see that there has to be a negative impact on bargaining, there could be a positive one, but I can't see a negative one."  He said it appeared most employees were getting more and more positive about KiwiSaver but that it was important they knew all the facts and individual options before joining.  "At this stage the focus is to get as much information as possible in front of workers for them to make their own minds up."

Treasury has predicted there will only be an initial take-up of 20 per cent of workers signing to KiwiSaver, rising to 50 per cent over 10 years.

Unions are discussing streamlining political campaigning during next year's election by combining their cash in a centralised fund.  The idea, under preliminary discussion, comes as government looks to clamp down on third party campaigning.

Increased transparency around third party campaigning is designed to restrict activities such as Exclusive Brethren's $1m anti-Labour/Greens election leaflet drop, but has led to accusations that Labour is protecting a key source of income by favouring the unions.

The Council of Trade Unions' (CTU) president Ross Wilson said the centralisation idea was not in reaction to the proposed changes but had been pitched because unions had become more united.  He said there were also "clear threats to workers' rights. We gained a lot in seven years for workers ... a lot of things we have helped to campaign around and all those things are at risk if the centre-right parties continue to support their current policies".

Under the CTU proposal, unions would direct money to the single fund which would be used to inform members on parties' policies. It could also be used for external advertising, but that would have to be declared under Labour's proposed reforms.

However the Post Primary Teachers' Association (PPTA) - which National MP Murray McCully calculated spent $373,000 on advertising during the last election campaign - is unlikely to endorse the idea.

The association's president Robin Duff refused to detail exactly how much was spent in 2005 but said it was "significant". Duff said the money was not party political but spent on advocating a "first class" education system: "For me all governments should come with a health warning, and all parties", he said.  Duff said he would probably not support a central fund because the PPTA did not want to be part of a "bland campaign" that could be regarded as pro-Labour.

Leaked details around the suggested reforms include the capping of "third party" spending per year to $60,000, with those who spent more than $5000 nationally needing to register with the Chief Electoral Office. Groups such as unions and companies would be exempt if they were communicating with their members or employees.

During the last election campaign unions donated $160,000 to Labour and the CTU spent a further $83,000 on campaign advertising. Union officials helped with campaigning and some also advertised, including the EPMU which spent around $40,000.

Electoral Commission records show Labour got $930,000 from donations, with the unions and Sydney-based New Zealander Owen Glenn's $300,000 donation making up half the money. National received $1.88m, $1.75m of it anonymous or channelled through trusts.

Under the proposed reforms, Wilson said unions should still be able to tell their members directly about, for example, which parties it believed had the most favourable employment policy. It would be a "grey" area if that sort of advertising was broadcast to a wider public through radio or television, but "communicating with your members ... I don't see how that could be restricted in any way".

National deputy leader Bill English has accused Labour of structuring the proposed reforms to protect the unions, but Wilson said "the amount that we contribute as a direct or indirect campaign contribution is minimal ... it is often stated as though unions are the equivalent to corporate donations, but that is not the case".

The unions are still discussing the impact of the proposed reforms and the CTU plans to hold a public meeting on electoral funding on May 1 at Auckland University. Speakers include Nicky Hager, author of The Hollow Men and Dr Raymond Miller, head of the University's politics department.