Building a `high road' economy? The Employment Relations Act in an International Comparative Perspective

Abstract

New Zealand’s labour productivity growth has been below the OECD average for the last 30 years (Business New Zealand 2008a) and a consensus has developed between the social partners that this needs to be urgently addressed. Given that there have been two radical reforms of the employment relations framework since 1991, both of which have been presented as part of the solution to New Zealand’s poor productivity performance, this consensus is an admission that both frameworks have failed in delivering on a fundamental policy aim. The Employment Contracts Act 1991 (ECA) was predicted by its supporters to deliver significant productivity growth. Central to these predictions was the belief that trade unions were the primary cause of New Zealand’s poor productivity performance by resisting labour-saving technologies or work reorganisation, introducing demarcations between jobs and engaging in industrial action. Even some union-friendly economic commentators (e.g. Easton 1996) suggested that union-instigated restrictive practices were significant contributors to low productivity and they therefore expected to see productivity growth under the ECA.