Our Union-Powered Past

What’s happened to trade unions since the 1970s?
by Ross Webb

Labour’s soon-to-implemented workplace relations policy aims to address the imbalances in our economy, but has sparked fears among some that it marks a return to ‘the bad old days’ of the 1970s. But what exactly was happening in the 1970s? And what has caused the ‘imbalances’ that Labour is now trying to fix?

union-photo-oostermanIn June last year, the Labour Party released its workplace relations policy, which included, among other things, an increase in the minimum wage, the narrowing of the 90 day ‘fire at will’ law and the introduction of Fair Pay Agreements (FPAs) to ‘set fair, basic employment conditions across an industry’.

Employers, right-wing bloggers and the National Party immediately denounced the policies as a return to ‘the 1970s’. In ways similar to the wave of criticism Jeremy Corbyn received after releasing the new (and ultimately quite popular) Labour Party Manifesto last year, Labour’s opponents denounced the policies as a hearkening back to a long-past time of chaos and confusion, of National Awards (industry agreement setting minimum pay and conditions) and strikes.

Business New Zealand chief executive Kirk Hope claimed the return to the award-type system would be disastrous. David Farrar said it was ‘a return to 1970s style national awards’, while Steven Joyce added that it was a return to the ‘bad old days of the 1970s’. During the live leaders’ debate, Bill English said the policy was a ‘return to the 1970s’ after moderator Mike Hosking asked Ardern if the policy was a ‘return to unionism’. Ardern herself found it difficult to defend the policy, vaguely stating that there would only be two to three Fair Pay Agreements a year.

The alleged ‘bad-old days’ of the 1970s are long gone. But what exactly happened back then, and why? Why has the 1970s become the political bogey of economic and employment relations policy worldwide? And what has happened to unions since the 1970s to make the current system so ‘imbalanced’?

The ‘bad old’ days of the 1970s

The depiction of the 1970s as the ‘bad old days’ neglects to mention the (at times) aggressive actions of employers and the government, and the social and political climate – not to mention international economic trends that were well beyond New Zealand’s control.

Briefly, the end of the post-war economic boom in the 1970s placed significant pressures on working people and unions, as they sought to protect themselves against the erosion of their wages.

Prices were rising faster than workers’ wages.

freezing-workers-westerfield-early-1970sIn June 1968, unions had applied to the Arbitration Court for a general wage increase for all workers. The Court declined, and from then onwards, unions increasingly lost faith in the arbitration system, resulting in a dramatic spike in industrial disputes over the next decade. The 1970s marked the highest level of industrial disputes in New Zealand history.

How were unions able to mobilise? Among the relevant factors: a broadly supportive industrial relations regime, compulsory unionism, large workplaces and a growing militancy among workers influenced by the social movements and activism of the day. Unions became involved in political struggles, striking against visiting US nuclear warships, the Security Intelligence Service (SIS) bill in 1977 and in support of the anti-apartheid movement. Unions also played a role in the Bastion Point/Takaparawhau occupation. In 1978, when Ngāti Whātua o Ōrākei protestors were evicted from Bastion Point/Takaparawhau in Auckland, Wellington freezing workers led by Ben Mathews walked off the job in protest.

But why were there so many strikes?

Companies’ efforts to maintain profits during a period of economic recession ran up sharply against workers’ desire to maintain pay that kept pace with inflation – some of which was imported by the first wave of OPEC oil price hikes. Domestically, unions were also contending with an aggressively anti-union Prime Minister after 1975, Robert Muldoon. As historian Jim McAloon points out, while Muldoon appealed to the ‘ordinary bloke’, Muldoon’s ‘ordinary bloke’ was never an active trade unionist. The 1970s concluded with New Zealand’s first and only general strike. In 1979, Muldoon intervened and ended a wage settlement between the Drivers Union and its employer – and in response almost 300,000 workers took part in marches around the country.

Public attitude towards the union movement shifted in the 1970s, according to historian Ryan Bodman, as Muldoon employed ‘Red Scare’ tactics and wedge politics against the union movement, creating a deeply antagonistic relationship that some unionists referred to as ‘the hatred campaign’. In 1984, a bomb was placed in the Trades Hall in Wellington killing the janitor, Ernie Abbott. The intended target was trade unionist Pat Kelly (Helen Kelly’s father). The case remains unsolved.

The union movement welcomed the election of the Fourth Labour Government in 1984 although Labour would begin a revolution that – ultimately – would undermine union power and significantly shift the allocation of wealth in the country. In workplace relations, Labour took a largely hands-off role. The Minister of Labour was widely known as ‘Sideline Stan’ Rodger. But their economic policy – Rogernomics – hit trade unions hard, as factory closures and massive redundancies swept the nation. Between 1986 and 1990, for example, the meat freezing industry workforce of 31,000 was halved. Defensive strike action (and lockouts) became more common. Rather than fighting for higher wages to keep up with inflation, unions fought to retain pay and conditions and for decent redundancy pay.

So what changed?

countdown-marchThe decades after the 1970s have certainly seen less industrial disputes. But does that mean we’ve been better off? Not for the majority of workers.

Since the 1970s and 1980s, the gap between productivity and incomes, relatively in line for much of the post-war years, has widened rapidly. Today, productivity has increased, while wages have stagnated. In 1991, the National Government introduced the Employment Contracts Act which removed all exclusive rights of unions. Its intention was to drive down wages and undermine union power. And it worked.

As a result, the number of union members plummeted and employers used their now unconstrained powers to shape industrial relations in their own interest. By 1994, union density dropped between 38-47% and employers organised to remove unions from their workplaces. Free markets and deregulation promised ‘wealth creation’ and ‘individual freedom’, but resulted in an lopsidedly uneven distribution of wealth, as well as stagnant wages and declining standards of living for many. In 1994, the International Labour Organisation (ILO) found that the Employment Contracts Act violated important labour conventions.

Helen Clark’s Labour Government (1999-2008) removed some of the harsher anti-union aspects of the ECA, reinstated union access to worksites and provided a requirement for “good faith” bargaining. But they also retained much that was in the ECA.

The legacy of the National Party

The National Party (2008-2017) continued the trend of undermining the union movement. Aided by their supposedly non-ideological leader, John Key, National distanced itself from the radical employment law reform of its predecessors in the early 1990s. It was an approach taken in many other aspects of National policies under Key (opting for partial rather than full-scale privatisation ; embracing the Maori Party, rather then following the racist rhetoric of his predecessor Don Brash). While in opposition in 2006, Key signalled that there would be few changes to employment relations, and correctly highlighted that Clark’s Labour Government never actually made significant changes in the first place. Labour’s changes, Key said, was ‘85 percent a rewrite of the Employment Contracts Act anyway’.

hobbit-marchYet in its first term, the National Party did introduce changes, including the 90 Day Trial Period, which allows employers to dismiss staff at any time within the first three months on the job, without needing to provide a reason. Research later showed that the trial period had no positive impacts on employment, and had been used by employers to reduce costs. Then there was the ‘Hobbit Dispute’ in which the government changed employment law to favour the employer, this time a multinational film corporation. The union movement was demonised, especially Helen Kelly (who took a lead in the campaign) and the dispute led to an anti-union rally, the likes of which New Zealand had not seen since the ‘Kiwis Care’ rally of 1981. Emails later released vindicated the union position, revealing that union action had nothing to do with Warner Bros’ decision on whether or not The Hobbit would be filmed in New Zealand.

In its third and final term, National introduced its most significant attack on the union movement. They removed key rights around collective bargaining, allowing employers to ‘walk away’ from bargaining with unions. These changes were ‘clearly aimed at reducing the influence of unions and collective bargaining and increasing the vulnerability of individual workers by removing the protections and support that the union provides’, explained Victoria University academic Dr Stephen Blumenfield.

The law significantly aided employers seeking to rid their workplaces of unions – including the Talley family who locked out meat workers for months at a time in 2012, and again in 2015. Around the same time, the National Government awarded a knighthood to Peter Talley.

Regardless, the union movement was not passive during these years. Major campaigns emerged during the period, including the Living Wage movement, the successful fight against Zero Hour Contracts, the campaign for better health and safety for forestry workers, and equal pay for workers in positions traditionally occupied by women. Without these movements, the union movement would currentlly be in a worse state.

The imbalance today

The union movement has never recovered from the changes made since the 1970s. The decline has been devastating. Strikes are rare and union membership is low, and declining. And this has had clear effects. The stark imbalances in our economy, especially the massive income gap between the richest and poorest, are relatively well documented, and according to Council of Trade Union (CTU) economist, Bill Rosenberg, the labour income share is declining still. Despite this, there remains little sympathy for the union movement, and for workplace legislation to address the gaps.

This reflects a broader trend. Since the 1990s, workers’ rights no longer hold the same status. The decline of union membership and the growing individualisation of the relationship between employer and employee has had much to do with this, as has the shift from a largely manufacturing to service sector economy. Trade unions are often viewed as anachronistic organisations that have outlived their purpose; relevant in the days of child labour and factory jobs, but irrelevant in our modern work environments.

Labour’s Policy

ardern-imagesEven so, the Labour Government’s workplace relations policy offers some bold promises. In the Manifesto, the party claims that ‘the current employment relations system is failing. Low wages, little say on rosters or hours of work, and an erosion of conditions have been the norm for many workers in New Zealand workplaces, especially for female and young workers’. The CTU recently spelled out the need for action:

Over the past 30 years, more than $350 billion has flowed out of New Zealand’s economy to overseas banks and foreign owners of our assets. In the same time, the share of the economy going to working people has fallen from over 50 per cent to just over 40 per cent, cutting $20b a year from pay packets.

The changes to industrial relations announced by the Government will make a real difference to a lot of New Zealanders. Basic stuff like ensuring people can have a meal break and are protected from discrimination are fundamentally good things, but they are also largely focused on the margins. They reinstate some bare minimums you’d expect in a first world nation like ours.

In the first 100 days Labour plans to address, in Ardern’s words, ‘areas where the last government made changes that we disagreed with’. The proposed changes introduce restrictions around the 90-day trial – which is being retained only within small businesses employing fewer than 20 employees; these small firms comprise 97 % of NZ enterprises overall, but employ only 29% of all NZ workers. Protections around collective bargaining are also to be restored.

Fair Pay Agreements are not part of the early proposed changes. While the project of the first 100 days – the undoing of the National Party’s legislative changes over the past nine years – should be welcomed, it falls well short of addressing the imbalances that have their roots in the 1970s. The union movement must hold the Labour Party to account on its key election promise, and prove that unions are one of the few institutions today capable of correcting the great imbalances in the New Zealand economy.