Partnership in the workplace

Unions are about confrontation, carving holes in profits, right? Well, maybe not.

Some unionists have grasped that re-cutting the cake does not in the end lead to sustainable higher real wages. What does that is baking a bigger cake.

And that means forming common cause with enterprises to lift productivity and get more value-added from each employee.

Note, not to cut the cost of each employee. After the cost-cutting of the 1980s and 1990s, “productivity” has come to mean, for many employees, “I have to work harder” or “I will lose my job.” Why cooperate to produce that?

What “productivity” should mean to employees is “getting richer” — in money wages and better lifestyle choices as well as better profits. Shifting the language is one challenge in front of Michael Cullen’s tripartite productivity working group, due to report in a couple of months on ways to lift productivity growth. It is productivity growth that determines our place in the OECD wealth rankings.

One way was pointed out in a Treasury research paper released in May (Business Herald May 11): more capital behind each worker. The paper pinpointed lower capital accumulation as a major reason why New Zealand labour productivity growth has lagged Australia’s.

But there are other ways. Linda Kelly is pursuing one.

Kelly, who describes herself as a union moderniser, heads the British Trades Union Congress’s partnership institute, a government-supported operation.

Kelly’s brief is to persuade company chiefs and union bosses to lay down battle-axes and work together at the enterprise level to make enterprises more profitable and more employee-friendly. Company CEOs need persuading that, as Kelly puts it, “staff are people are adults”. Union bosses need persuading that a healthy enterprise is in employees’ interest, not stealing their birthright.

“British management is better at introducing technological changes than people-related,” Kelly said in an interview on a brief visit to Wellington on 18-19 May. “They put much more money into technology than people.”

But unions also often have not treated employees as people — rather as ciphers in a battle with employers. Partly as a consequence, unions’ share of the workforce has dwindled — to around 12%-13% of the private sector workforce in this country — as employees have chosen not to join. This is even though often many non-union employers nevertheless act deal collectively in an informal way with the management over their interests.

Kelly puts it this way. The old unionists, of whom there are still many in office (in Britain at least), were about “clout”, beating the company, bargaining as if in a “bunker”, sometimes calling strikes, putting employees in opposition to employers. But employees are much more likely these days, Kelly says, to want “influence, not clout”. They want to be heard and taken into account.

A partnership approach links wage negotiations with the wellbeing of the business, a process in which, Kelly insists, both sides can win. Wages become part of a wider picture which respects the company bottom line but in which also, for example, sick leave levered into a contract is replaced with a joint policy on ill-health that reduces absenteeism and looks after employees.

Kelly says that in enterprises where the institute has established a partnership, the workforce is more motivated and more productive — and better off.

She is now pushing to have her institute taken out of the Trades Union Congress and made independent of the union movement so that it can gain wider credibility with employers — and employees who don’t want to join unions.

Could this happen here?

A report is due soon to the government on a partnership centre. It is being prepared by Owen Harvey of Innovation and Systems Ltd and Peter Harris, former economist with the Council of Trade Unions and then adviser to Cullen.

It has grown out of the insertion of “good faith” into the workplace bargaining law by the 2000 legislation, now being beefed up in the contentious Employment Relations Law Reform Bill. The idea is a small centre which would do research and educate bargainers and over time earn money by consulting to firms.

Is it too long a step from “good faith” to “productivity” as a function for this proposed partnership centre? In the present climate, probably. While the CTU and Business New Zealand have been able to work together to some extent on the productivity initiative, there is a gulf between them on many relevant matters.

But former Labour Minister Margaret Wilson stated before moving on that the present bill is the last major change in workplace law. Though it is causing apoplexy on the employer side, it falls far short of the CTU’s wishlist.

That is a prod to unions to turn elsewhere to drive wages up. The “elsewhere” is higher enterprise productivity, which alone will can produce sustainable real wage increases. If unions can somehow present themselves as catalysts in improving the overall tone of workplaces to employees’ benefit, they might that way not only achieve genuinely higher wages but also reverse their waning appeal.

Of course, employers don’t need to wait to be asked to tango. Kelly says Wal-mart is a non-union chain in Britain but works effectively with its employees to create a sense of involvement and influence and gets commitment in return. No outside prod or help was needed. Just smart management.