The new government, led by Prime Minister Christopher Luxon and supported by New Zealand First, has faced pressure from the business sector to change the employment laws, such as getting rid of fair pay agreements and bringing back 90 day staff trials. However, these changes could harm the rights and conditions of the essential workers who have been crucial during the pandemic, according to workers’ unions and advocates.

Fair pay agreements are a form of industry-wide collective bargaining that set minimum standards for pay and conditions for workers in sectors such as bus drivers, cleaners, and supermarket workers. They were introduced by the previous Labour-Greens government as a way to improve the situation of low-paid and vulnerable workers. However, Business NZ chief executive Kirk Hope said that fair pay agreements were not beneficial for workers and imposed unnecessary rigidity on the labour market. He said that businesses expected the new government to scrap them.

On the contrary, Council of Trade Unions president Richard Wagstaff said that fair pay agreements were a vital step to ensure decent work standards for the workers who had been underpaid and undervalued for too long. He said that removing them would be a backward step and make life harder for those workers.

Another issue that divided the business and union sectors was the 90 day staff trials, which allowed employers to hire new employees on a trial period for up to the first 90 days of their employment, without having to provide a reason for dismissal. The previous government had limited the use of 90 day trials to businesses with fewer than 20 employees, but the new government has signalled its intention to restore them for all businesses. Hope said that 90 day trials enabled businesses to take a risk with people who might not have the skills and give them a chance, without having to go through an expensive process if they did not work out. He said that 90 day trials were especially useful in a tight labour market, where unemployment was expected to rise to 5.5 percent.

However, Wagstaff said that 90 day trials increased insecurity for new workers, without making any difference to the unemployment rate. He cited a Treasury report that found that 90 day trials had no impact on hiring practices or the real economy. He said that 90 day trials just brought workers insecurity and stress.

The new government has also faced criticism from the union sector for its decision to give the Reserve Bank a sole focus on inflation, rather than a dual mandate of inflation and employment. Wagstaff said that this move showed that the government cared more about cash in the economy than people. He said that the Reserve Bank had worked well with a balanced mandate that considered both social and economic imperatives. He also expressed his disappointment with the government’s plan to cut public spending and lay off tens of thousands of public servants.

The business sector, however, welcomed the government’s monetary policy stance and its commitment to fiscal discipline. Hope said that the government had shown a clear vision and direction for the economy, and that he hoped to see more action on infrastructure, tax reform, and trade. He said that the business sector was ready to work with the government to create a more competitive and productive economy.