Essay on Employment Relations, Union Density, and ERA in New Zealand

This essay examines the employment relations landscape in New Zealand, particularly focusing on the decline and stagnation of union density rates, despite the introduction of the Employment Relations Act (ERA) in 2000. The essay explores the role of trade unions in promoting collective bargaining, the decline of union membership in the private sector, and the factors contributing to the static union density. It discusses the impact of the ERA, the reasons behind the decline in union membership, and the challenges faced by unions, including company hostility and changing worker demographics. The essay analyzes the reasons behind the decline in union density rates and the impact of the ERA. It also discusses the role of collective bargaining and the challenges in the private sector. The essay concludes by highlighting the complex dynamics of employment relations and the need for unions to adapt to survive. This essay contributes to the understanding of the complex dynamics of employment relations in New Zealand and the challenges faced by trade unions.

Running head: EMPLOYMENT RELATIONS ISSUE
Employment Relations Issue
Student’s name:
Name of the university:
Author’s note:

1EMPLOYMENT RELATIONS ISSUE
Introduction
Trade Unions feature prominently in explanation of relative industrial decline. In
developed European countries, Unions have been blamed for damaging productivity, destroying
jobs and increasing the labour costs. Trade Unions have common goals to protect and integrate
the trade, safety standards, benefits to the employees and better wages of the employees. In
public and community service, employees like to be part of the trade unions and the membership
from this industry has been observing a decline in the past few years. Poor wage, rising
inequalities and increased dissatisfaction in New Zealand are led to the renewed interest towards
collective bargaining and social dialogue for strengthening the bargaining power.
This essay is going to discuss the question of employment relations in New Zealand that
describes about stagnant of Union Density Rate. This essay explains the trade unions role in
promoting collective bargaining.
In this essay, in the first half, a decline of union density rate in New Zealand is described.
Density rate remained stagnant after the introduction of the Employment Relations Act (ERA) in
2000 despite the beginning of the act to support for trade unions and specific objective of
promoting collective bargaining. In addition, the decline of private sector union membership and
collective bargaining are focussed in this essay in the final section.
Union density rates in New Zealand
Union density rate can be described as the ratio of the employees’ numbers who are
members of the trade unions to all employees of the country (Hirschi, Macpherson & Vroman,
2010). In addition, union density rate is lower than collective agreement coverage rate that means
to all the employees in the workplaces are agreed collectively. In New Zealand, trade union
culture has been predominant and NZCTU has been founded in 1987. It has more than 360,000

2EMPLOYMENT RELATIONS ISSUE
members and it is the largest democratic organisation in New Zealand. From the end of the year
1999 to 2006, the union membership increased a bit and growth levelled off with a minimum 1%
growth by the end of 2010. However, of late the union density rate decreased by 2% between
2013 and 2014. Since the time of 2010 till 2016, there has been 7% decline in union membership
(Jacobi et al. 2017). Introduction of the ERA had negotiated collective employment agreement
and in addition, during the time of ECA, Government set up many in-house unions and
employees to maintain bargaining for collective employment contracts. ECA had been replaced
and unions have been increased to 181 whereas it had started from the 82 in the year 1999.
Union density rates over the period between 1991 and 2008
Moreover, many of the small unions stopped operating and many of the unions have been
merged between 1999 and 2006. Subsequently, many of the union membership had reduced to
the small industries. In recent time, registered unions decreased to 117. In the year 1999,
December, Union Density in New Zealand was 42.9% (1/4%) and this figure reduced to 21.4%
(1/4%) in 2008 (Brewster & Hegewisch, 2017). In the year 1991, numbers of unions were 66 in
New Zealand whereas 2008, numbers of unions increased to 141. Public and Community service
in New Zealand has been predominant to impact on the union membership whereas 23% of the
members are from the healthcare sector. Therefore, it has been observed that density rate
decreased by almost 20% from 1991 to 2000 in New Zealand. Public administration industry
provides third largest union members in New Zealand. In addition, in the manufacturing sector,
union density in recent time is 21% and it has been observed a change of membership by -5.7%.
As pointed out by Hodder et al., (2017), in rental and real estate service, this union density rate
decline has been highest and it was -22% since 1991 to 2010. On the positive note, apart from
the public sector, the union density is keeping high volume in postal, transport and warehousing.

3EMPLOYMENT RELATIONS ISSUE
However, the union density in New Zealand between 1999 and 2008 has fallen in almost all
industries as growth in the employment side has outstripped. In education and training, the union
density was highest in the year 2008. As stated by Geary (2016), in occupation, professionals are
the highest who are top of the list in union membership. New Zealand was adversely affected by
the overhaul legislation ending national agreements and closed membership award. In New
Zealand, overall union density in the year 2008 was 17.7%, where public sector members’
density was 60% and private sector’s member density was 10%. Bonoli (2017) observed that
numbers of females members in the unions have been increased as in the year 2004, the
percentage of the female member was 52 and in the year 2008, this figure touched to 57%.
NZCTU gave affiliation to 43 trade unions in the year 1991 and they gave 37 new trade unions.
Reasons behind density rates remained stagnant after ERA in 2000
In OECD countries, collective negotiations and unions of labour standards are the key
features of the employment. In recent times, the perception about collective bargaining has been
observing a decline (Cooper & Mishel, 2015). ERA commenced in New Zealand in the year
2000 and it is a statute in the New Zealand Parliament, Section 15 in ERA states about Registrar
of Unions and the people who are employees in the New Zealand Department of Labour. The
employees must register must register as a union to meet the criteria stated in Section 14. ERA
states about union's power and roles and access as well as meetings. Sections 20 provide union
representatives with the access to enter the workplace purposes; Unions can do the collective
bargaining, deal with safety and health issues and monitor the compliance. Introduction of ERA
cannot change the situation of the decline of union density rates despite the act supports the
specific objective of collective bargaining (Chan & Hui, 2015). In New Zealand, wages remained
same between the age of 1993 and 1995 for the one-third of the employees despite the rise of

4EMPLOYMENT RELATIONS ISSUE
CPI. However, after the time of 1996, the wages rate fell and Real Wage Rate index in New
Zealand fell almost 1.3 percent.
ERA in 2000 Act supports for trade unions and specific objective of promoting collective
bargaining
Collective Employment Contracts (CEC) fell from the high of 721,000 to 40,000 in the
year 1997. The reason behind this is the collapse of bargaining of multi-employer (George,
2015). That time during 2000, only 24% of the employees were the part of CEC and one-sixth of
the employees worked in the workplaces. Mazzucato (2015) added that the pay condition and
wage rate did not increase after the introduction of ERA and ERA could not provide any
guarantee against the decline of pay. During the time of 2000, the term of collective coverage
changed and the employees went for longer contracts in manufacturing and retailing. The
profitability of the telecom sector ensured through the workforce cutting and in six years, the
telecom sector in New Zealand made double the profit by making the employees half in this
sector (Wang & Seifert, 2017). Hattam (2014), supported this by saying, organisations showed a
strategy of deunionising the employees and they wanted to make the employees come into the
individual contract. Public sector employees saw the restructuring and commercialization of
maximum sectors. Public sector became ruthless than the private sector. Before the time of
deunionisation, during 1996, the Government thought about the lower costs of the employees
and increased flexibility that can boost the economy as well as productivity (Gyourko & Tracy,
2017). In New Zealand, collective coverage shrank by 8% after 2000. However, ERA provided
collective bargaining that set the rules that both parties should act in good faith. Collective
bargaining helps to provide certainty for all the parties. It can recognize the bargaining for
employment agreement and it helps in negotiations, representatives and advocates as well. In

5EMPLOYMENT RELATIONS ISSUE
addition, as stated by Lipset & Katchanovski (2016), Collective bargaining provides parties
flexibility to search their own way forward. Additionally, as pointed out by Cooper & Mishel
(2015), the collective agreement is helpful to make a closed shop or permit the automatic
enrolment in making the union membership. New Zealand government is not actively promoting
the collective agreement coverage with a notion to impose the collective bargaining and
employees can refuse the bargaining within the workplace. On the contrary, Chan & Hui (2014)
viewed that some of the OECD countries enable the collective agreements are to be increased
within the regulations of the government to all the employees when the coverage rate needs to
reach all the sectors in similar level. Declining the union membership had cost almost $132
billion in lost of the wages for the non-union workers annually. Unions sometimes seem
irrelevant and workers cannot believe the unions to secure those profits and benefits. In addition,
as supported by Haynes, Vowles & Boxall (2015), the high cost of union labour is another factor
of the decline of union membership in private companies and in New Zealand, unions often have
a poor public image and found downright corrupt.
Conclusion
In New Zealand, union membership has declined considerably and company hostility is
one of the reasons. The overly-aggressively union may be another reason for their decline. The
ERA in New Zealand could not make able to make stronger the union and changing composition
of the workers can be responsible for that. The result is a dilemma that transcends partisan union-
bashing. Striving too hard to protect existing wages and benefits will stimulate more political
opposition, and not just from Republicans. However, sacrificing too much may trigger a revolt
from angry rank-and-file members. Private-sector unions couldn't solve this dilemma; they never
reconciled past successes with future survival. During this period, telecom sector opted for

6EMPLOYMENT RELATIONS ISSUE
privatization and privatization created different concerns for the poor consumers, unions and
employees. The state-owned government could not remove the employment conditions and in
case of the private sector, they opted for the job cuts. The decline of union membership in the
private sector may be occurring due to the encouragement of jurisdiction for sectoral collective
bargaining and overall enterprise bargaining as it is stated as lower coverage. New Zealand,
employees found in previous time that unions could not protect them from layoff, reduction of
wages and sturdy working condition. Moreover, workers cannot understand the union politics
and the private sector labour movement. Workers want to turn towards the government, not to
the unions and collective bargaining and they can rely on government more. Retail workers
faced the issue of extreme competition, deregulation and rationalization of international mergers.
During the time of 2000, underemployment meant for part-time workers and the employees
agreed to work in lower pay. The workers who are not in the part of unions, they show an
interest to join the union if they find an opportunity of bargaining through unions.

7EMPLOYMENT RELATIONS ISSUE
Reference List
Bonoli, G. (2017). Labour market and social protection reforms in international perspective:
parallel or converging tracks?. London: Taylor & Francis.
Brewster, C., & Hegewisch, A. (Eds.). (2017). Policy and practice in European human resource
management: The Price Waterhouse Cranfield survey. London: Taylor & Francis.
Chan, C. K. C., & Hui, E. S. I. (2014). The development of collective bargaining in China: From
“collective bargaining by riot” to “party state-led wage bargaining”. The China
Quarterly, 217, 221-242.
Cooper, D., & Mishel, L. (2015). The erosion of collective bargaining has widened the gap
between productivity and pay. Economic Policy Institute, Washington, DC. www. epi.
org/publication/collective-bargainings-erosion-expanded-the-productivity-pay-gap/.
Accessed, 10.
Employment Relations Act 2000 No 24 (as at 01 January 2018), Public Act Contents – New
Zealand Legislation. (2018). Legislation.govt.nz. Retrieved 15 March 2018, from
http://www.legislation.govt.nz/act/public/2000/0024/latest/DLM58317.html, from
http://www.legislation.govt.nz/act/public/2000/0024/latest/DLM58317.html
Geary, J. (2016). Economic crisis, austerity and trade union responses: The Irish case in
comparative perspective. European Journal of Industrial Relations, 22(2), 131-147.
George, C. (2015). Retaining professional workers: what makes them stay?. Employee
Relations, 37(1), 102-121.

8EMPLOYMENT RELATIONS ISSUE
Gyourko, J., & Tracy, J. (2017). An analysis of public-and private-sector wages allowing for
endogenous choices of both government and union status. Journal of labour
economics, 6(2), 229-253.
Hattam, V. C. (2014). Labour visions and state power: The origins of business unionism in the
United States. Princeton University Press.
Haynes, P., Vowles, J., & Boxall, P. (2015). Explaining the younger–older worker union density
gap: evidence from New Zealand. British Journal of Industrial Relations, 43(1), 93-116.
Hirsch, B. T., Macpherson, D. A., & Vroman, W. G. (2010). Estimates of union density by
state. Monthly Labor Review, 124(7), 51-55.
Hodder, A., Williams, M., Kelly, J., & McCarthy, N. (2017). Does strike action stimulate trade
union membership growth?. British Journal of Industrial Relations, 55(1), 165-186.
Jacobi, O., Jessop, B., Kastendiek, H., & Regina, M. (Eds.). (2017). Technological change,
rationalisation and industrial relations (Vol. 3). London: Taylor & Francis.
Kelsey, J. (2015). The New Zealand experiment: A world model for structural adjustment?.
Bridget Williams Books.
Lipset, S. M., & Katchanovski, I. (2016). The future of private sector unions in the US. Journal
of Labor Research, 22(2), 229-244.
Mazzucato, M. (2015). The entrepreneurial state: Debunking public vs. private sector
myths (Vol. 1). Anthem Press.
Wang, W., & Seifert, R. (2017). Pay reductions and work attitudes: the moderating effect of
employee involvement practices. Employee Relations, 39(7), 935-950.