Elections are due to take place in September this year, with National and Labour as New Zealand’s two major political parties. If there is a change of government and Labour obtains a majority, Labour has pledged to increase the minimum wage to $16.50 (from $15.75 at present), and to keep increasing it to two-thirds of the average wage “as economic conditions allow”. In contrast, the current National government usually increases the minimum wage by 50c each year and it sits at roughly 50% of the average wage at the moment.
Labour’s policy is also to pay all “core” public service employees at least the living wage. This is a wage assessed by various social groups as the wage needed to live reasonably. This could have the effect of increasing wages across the board as private sector employees compete to attract staff. The living wage in New Zealand is currently $20.20 per hour
More significantly, Labour has pledged to introduce Fair Pay Agreements, which will comprise a common set of terms and conditions of employment applying to a particular industry. Labour says wages and conditions will be set by “pay and experience”, so wage increases based on length of service alone may be a feature of FPAs. Labour says, “Negotiations on FPAs will begin once a sufficient percentage of employers or employees within an industry call for one. This threshold and the precise implementation of FPAs will be developed in government in consultation with all stakeholders.” At this stage, we don’t have enough detail to assess the impact FPAs may have, but the concept is a reasonably significant departure from our current law, which provides for individual employment agreements or collective agreements.