NZALPA Solicitor John Hall takes a close look at a series of consultation documents on the Future of Work - recently published by the Productivity Commission.

One of the most amusing aspects of the policy scene in New Zealand is when the legacy policies of vastly different political protagonists work together. Recently the Productivity Commission – established at the insistence of the ACT party in 2010 – produced the draft results of its Future of Work research study – promised by Labour in the 2017 election. 

The findings of this report are likely to impact how the Government structures labour and associated law reform. But, since it was established, the Productivity Commission attempts to foresee how future problems will need to be solved have been deeply influential. Several ideas hatched in Commission reports have been found growing into fully formed statutes under a different government. So, while Finance Minister, Hon Grant Robertson, once referred to the Future of Work as the “mission for the next century” of the Labour Party, the findings of the Productivity Commission’s reports may well find themselves growing up under a different environment. 

The Productivity Commission has produced five separate reports on technology adoption by firms, the role of the education system, and how to regulate for income security. The reports are: 

• Technology adoption by firms 
• Educating New Zealand's future workforce 
• Training New Zealand's workforce 
• Employment, labour markets and income, and  
• New Zealand, technology and productivity. 

New Zealand firms and new technology 

Somewhat unexpectedly, the Commission found that the main problem is not too much technology but not enough. It found little evidence that technological change would disrupt the labour market soon. On the other hand, the slow pace of technological adoption has been identified as a potential threat to productivity. 

The Commission is concerned that there are a high number of low-productivity firms “tying up resources that could be put to better use by other firms”. Capital and labour are the two resources highlighted. It identified several remedies to this, including incentivising innovation and ensuring it remains easy to start a new business. However, some of the recommendations may be cause for concern for NZALPA members. 

The report recommends that Government focus on protecting workers and not jobs. This is intended to encourage workers to move between occupations – and is more challenging in the aviation industry than most others. Another recommendation is that the price of carbon emissions be raised. The idea behind this is that it will “drive adoption and investment” in lower-carbon technologies. Within the aviation sector this is likely to encounter problems of scale and Government should work closely with industry to ensure that it is properly resourced to maintain international competitiveness while dealing with higher domestic emissions prices. 

Education and skills 

The Productivity Commission has mixed views about the New Zealand education system. While it is clear that the curriculum is value for money, the Commission is not the first organisation to express concern that implementation of the curriculum is not going to plan. There is a widening gap between high and low achievement in New Zealand schools and overall curriculum implementation is behind schedule. 

In the tertiary education sector there are serious concerns about whether the current structure is sufficiently flexible to ensure that graduates are trained with the appropriate skills and that work-based training is available to people who are already employees. 

While aviation sector training was not directly within the study, flight schools may be pleased to know that the Commission was keen to ensure that temporary work visa holders have greater access to training and education in New Zealand. There may also be good news for pilots whose employers require them to be bonded for type rating courses if the Commission can persuade the Government to extend funding eligibility to providers for students who are not pursuing full qualifications and remove limits on funding short courses. 

Employment law and income security 

Perhaps the most concerning aspect of the draft report is the Commission’s desire to move the labour market away from a focus on job security towards ‘flexicurity’. This approach is characterised by, “low job security, high labour-market flexibility, high income security, high public spending on labour-market programmes”. For reference, the Commission described New Zealand’s current position as having ‘medium job security’. The intent is to allow for workers to freely move between various different careers throughout their lifetimes. 

While I am very open to hearing from NZALPA members about this before any legislation is actually presented, my concern is that many members are air traffic controllers (ATCs) or pilots because they enjoy and find meaning in that role. Retraining from a career as an ATC or a pilot is not a simple affair. While the Commission’s findings on the education system make it clear that it realises the need to make mid-career tertiary retraining more accessible, there is a risk that the Government may not fully appreciate this – particularly where the Government itself is the employer.

Somewhat more troubling is the Commission’s conclusion that there is a need to reduce “the risk of legal challenge to the employment status of contractors”. There are plenty of tools to enable flexible and part-time working arrangements for employees so that they can retrain without the need to recategorise them as contractors. Firms that wish to undercut workers by offering good incentives but only a limited range of minimum entitlements are not enhancing long-term productivity but perpetuating inequality.

The Commission has done well to identify the need to enhance access to technology. While it has acknowledged that there is a need for greater access to capital investment it would have been helpful if this theme had been more developed. Additionally, while it recognises the need for a more flexible tertiary education system, this point will need to be underscored and the appropriate funding provided. 

Finally, the Government cannot risk ambiguity in protecting workers rights; these cannot be sacrificed for the sake of more productive firms. 

Generally, the Commission makes good observations but I am troubled that in some areas its emphasis is wrong and will need to be tweaked. 

Read more about the Productivity Commission’s reports HERE.

Read the Labour Party’s original report HERE. 

Submissions on the draft reports ended in mid-February and a final report will be produced at the end of March.